Valuentum Exclusive Analysis for the Discerning Investor

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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 3, 2021

Best Idea Dollar General Announces Plans to Go International
Image Source: Dollar General Corporation – Fiscal 2020 Annual Report. We are big fans of Dollar General. The discount retailer has several big initiatives underway to extend its growth runway while boosting per store sales and enhancing its margins. Shares of DG have been treading water over the past few months after surging during the 2020 calendar year, though we still room for significant capital appreciation upside potential going forward. The company is a tremendous free cash flow generator, and we like shares of DG as an idea in the Best Ideas Newsletter portfolio.

Nov 17, 2021

Asset Allocators Fail, Advisors Should Pick Stocks, Save Investors $34 Billion Annually
Image: Most asset allocators can’t even keep pace with the underperforming 60/40 stock/bond portfolio. Highlight added by author. Image Source: Wealth Management. Let’s get this industry back on track. This isn’t about going all-in on cryptoassets or being reckless with one’s capital the past 10 years, but merely picking stocks as a risk/wealth management strategy that approximated the S&P 500 for the past 10 years, and how that has crushed not only the best that quant has had to offer in small cap value but also indexing and asset allocation. One hundred and seventy percentage points of difference relative to the 60/40 stock/bond portfolio, which itself beat many of the “best” asset allocators out there!!! This isn’t about taking on more risk, but rather that active stock selection should be viewed in the same vein as asset allocation. Why do we continue to publish the obviously-biased research in favor of indexing and asset allocation when stock selection could have delivered so much more for investors while saving them billions in annual fees from ETFs, etc. Today, the SEC has a lot on its plate regarding SPACs, cryptocurrency, new issues, ETF approvals and beyond, but in our view, the SEC shouldn’t necessarily be prioritizing 2 and 20 fees more than the index-fund fee chain, and it shouldn’t necessarily be trying to eliminate payment for order flow (PFOF) any more than it should seek to eliminate low-cost index funds. Let us not kid ourselves: It's clear why index funds and passive is winning -- the fees are tremendous! All things considered, if investors want to believe risk is volatility and suffer with indexing and asset allocators, that is their prerogative, but what worked in the past (deviations from equity selection as in the 60/40 stock/bond portfolio) bolstered by high interest rates in the 1980s is far from relevant today (and making up alternative assets isn't going to help). We don’t need more indexing and asset allocation books these days. We need more common sense. Stop selling index funds and start trying to help investors.

Nov 16, 2021

The Valuentum Weekly Is a Hit! Only Delivered By Email!
The Valuentum Weekly is a brand-new weekly market commentary from Valuentum Securities, released each weekend in digital form. The Valuentum Weekly offers members a weekly synopsis of the markets and major events. It will be straight and to-the-point. Our goal is to deliver to you the latest information and insights. We welcome your feedback on how we can make the Valuentum Weekly as useful and as relevant for you as ever!

Nov 12, 2021

Hard Work and the Trust That Binds
Image: Terry Johnson. It’s easy to forget how much we’ve been through the past two years. Often, we forget how helpful the warning that markets were going to crash was the weekend before they did on February 22, 2020, “Is a Stock Market Crash Coming? – Coronavirus Update and P/E Ratios,” how we thought dollar-cost-averaging made sense at the bottom in March 2020, and how we went “all-in” in April 29, 2020, “ALERT: Going to “Fully Invested” – The Fed and Treasury Have Your Back,” when we saw the writing was on the wall for this blow off top. If nothing else, these three moves alone during the past couple years have paid for a lifetime of subscriptions.

Oct 18, 2021

Dividend Growth Idea UnitedHealth Group Beats Estimates, Raises Guidance (Again)
Image Shown: Shares of dividend growth idea UnitedHealth Group Inc moved higher in the wake of its latest earnings report and guidance boost. On October 14, the health insurance and health care services provider giant UnitedHealth Group reported third-quarter 2021 earnings that beat both consensus top- and bottom-line estimates. The company also raised its full-year earnings guidance (again) for 2021 in conjunction with its latest earnings report, boosting its EPS forecast to $17.70-$17.95 and its non-GAAP adjusted EPS forecast to $18.65-$18.90. Shares of UNH are included as an idea in the Dividend Growth Newsletter portfolio as we are enormous fans of its fortress-like balance sheet and ability to generate free cash flows in almost any operating environment. As of this writing, shares of UNH yield ~1.4%.

Sep 13, 2021

The Investment Case for More Gender Diversity
Image: The Impact Shares' YWCA Women’s Empowerment ETF (WOMN) has trounced the S&P 500 since inception, while the SPDR SSGA Gender Diversity Index ETF (SHE) has bested the quantitatively-hailed small cap value ETF over the same time period. There has been a plethora of research over the years regarding the value of diversity on teams, in corporate boardrooms, and across asset management. One of the forms of diversity is gender diversity. It has been documented that diverse teams create more innovative ideas and creativity, which can serve as quite an advantage in industries where margins are slim, or there are few barriers to entry. While a 2019 study summarized in the Harvard Business Review indicated that the value of gender diversity is highly context-dependent and tends to have the greatest benefit where it is already valued, the corporate environment, and arguably the stock market, itself, are a few of those areas where value has been demonstrated.

Jul 29, 2021

Microsoft’s Dividend Is Rock Solid But Why?
Image Shown: Valuentum’s Dividend Report on Microsoft. The Dividend Cushion Ratio Deconstruction reveals the numerator and denominator of the Dividend Cushion ratio for Microsoft. At the core, the larger the numerator, or the healthier a company's balance sheet and future free cash flow generation, relative to the denominator, or a company's cash dividend obligations, the more durable the dividend. In the context of the Dividend Cushion ratio, Microsoft's numerator is larger than its denominator suggesting strong dividend coverage in the future. The Dividend Cushion Ratio Deconstruction image puts sources of free cash in the context of financial obligations next to expected cash dividend payments over the next 5 years on a side-by-side comparison. Because the Dividend Cushion ratio and many of its components are forward-looking, our dividend evaluation may change upon subsequent updates as future forecasts are altered to reflect new information. We estimate the efficacy of the Dividend Cushion ratio in warning against dividend cuts at about 90%. We measure this efficacy by looking at the Dividend Cushion ratios of companies that have cut their payouts in our coverage. If the company had a Dividend Cushion ratio below 1, we’d view the Dividend Cushion ratio as doing its job. Not all companies with high Dividend Cushion ratios are insulated from dividend cuts, and not all companies with low Dividend Cushion ratios will cut their dividend, but the Dividend Cushion ratio is yet another Valuentum-driven tool for your investor tool kit.

Jul 22, 2021

Johnson & Johnson Beats Estimates, Raises Guidance Once Again
Image Source: Johnson & Johnson – Second Quarter of 2021 IR Earnings Presentation. On July 21, Johnson & Johnson reported second-quarter 2021 earnings that beat both consensus top- and bottom-line estimates. The company (once again) boosted its full-year guidance in conjunction with its latest earnings update as Johnson & Johnson’s business is steadily rebounding from the worst of the coronavirus (‘COVID-19’) pandemic, with an eye towards the ongoing recovery in the sales of its medical devices and related offerings. We include shares of JNJ as an idea in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios. Its latest earnings report and guidance boost reinforced our favorable view towards the name. Shares of JNJ yield ~2.5% as of this writing, and the top end of our recently updated fair value estimate range sits at $206 per share of Johnson & Johnson, well above where shares are trading at as of this writing.

Jul 16, 2021

Dividend Growth Idea UnitedHealth Group Surges Towards All-Time Highs After Stellar Earnings Update, Guidance Boost
Image Shown: Shares of UnitedHealth Group Inc, an idea in the Dividend Growth Newsletter portfolio, are trading near their all-time highs as of this writing after the firm reported a stellar second quarter 2021 earnings report. In conjunction with its latest earnings report, UnitedHealth Group once again raised its full-year adjusted EPS guidance for 2021. We continue to be huge fans of the name. We are enormous fans of UnitedHealth Group, and the healthcare giant has not disappointed since we added shares of UNH as an idea to the Dividend Growth Newsletter portfolio back on November 27, 2020. Shares of UNH are up 26% from November 27 to July 15, outperforming the 20% gain seen at the S&P 500 during this period before considering dividend considerations (which would not change this picture much). The company’s balance sheet is pristine, its free cash flow generating abilities are simply stellar, and its growth outlook is incredibly bright. Recent guidance increases highlight management’s confidence that UnitedHealth Group is steadily recovering from the COVID-19 pandemic, keeping in mind that the resumption of elective surgeries and other heath service activities during the second half of this year will create temporary headwinds for the firm. Heading into 2022, UnitedHealth Group sees its various businesses having ample momentum, and the company’s growth outlook over the long haul is incredibly promising. We like UnitedHealth Group as an idea in the Dividend Growth Newsletter portfolio.