Valuentum Exclusive Analysis for the Discerning Investor

Symbol Keyword

Feb 8, 2021

Stock Market Outlook for 2021
2020 was one from the history books and a year that will live on in infamy. That said, we are excited for the future as global health authorities are steadily putting an end to the public health crisis created by COVID-19, aided by the quick discovery of safe and viable vaccines. Tech, fintech, and payment processing firms were all big winners in 2020, and we expect that to continue being the case in 2021. Digital advertising, cloud-computing, and e-commerce activities are set to continue dominating their respective fields. Cybersecurity demand is moving higher and the constant threats posed by both governments (usually nations that are hostile to Western interests) and non-state actors highlights how crucial these services are. Retailers with omni-channel selling capabilities are well-positioned to ride the global economic recovery upwards. Green energy firms will continue to grow at a brisk pace in 2021, though the oil & gas industry appears ready for a comeback. The adoption of 5G wireless technologies and smartphones will create immense growth opportunities for smartphone makers, semiconductor players and telecommunications giants. Video streaming services have become ubiquitous over the past decade with room to continue growing as households “cut the cord” and instead opt for several video streaming packages. We’re not too big of fans of old industrial names given their capital-intensive nature relative to capital-light technology or fintech, but there are select names that have appeal. Cryptocurrencies have taken the market by storm as we turn the calendar into 2021, but the traditional banking system remains healthy enough to withstand another shock should it be on the horizon. Our fair value estimate of the S&P 500 remains $3,530-$3,920, but we may still be on a roller coaster ride for the year. Here’s to a great 2021!

Feb 5, 2021

Earnings Roundup: Pinterest and Peloton
Image Source: Peloton Interactive Inc – Second Quarter of Fiscal 2021 Shareholder Letter. The outlook for the world economy, keeping near-term headwinds in mind, remains bright as global health authorities are actively working towards putting an end to the coronavirus (‘COVID-19’) pandemic largely through ongoing vaccine distribution efforts. As vaccine production scales up, widespread distribution efforts will become a much easier task. We’re continuing with our earnings commentary in this note by covering a social media contender (Pinterest) and an upstart exercise company (Peloton).

Feb 5, 2021

Dividend Increases/Decreases for the Week February 5
Let's take a look at companies that raised/lowered their dividend this week.

Jan 29, 2021

Starbucks Expects to Recover in Fiscal 2021
Image Shown: Shares of Starbucks Corporation appear fairly valued at this time. The top end of our fair value estimate range sits at $100 per share of SBUX.We're reiterating our fair value estimate of $80 per share of Starbucks, and the top end of our fair value estimate range sits at $100 per share. As of this writing, shares of Starbucks appear to be fairly valued at this time. While Starbucks’ operations are rebounding and its guidance for fiscal 2021 indicates the firm expects ongoing COVID-19 vaccine distribution activities will have a powerful impact on its near-term financial performance, the firm’s current share price already takes into consideration its pending recovery, in our view. We are not interested in adding Starbucks to any of our newsletter portfolios at this time.

Jan 29, 2021

Dividend Increases/Decreases for the Week January 29
Let's take a look at companies that raised/lowered their dividend this week.

Jan 24, 2021

Following Up on Leading Semiconductor Equipment Supplier ASML Holding N.V.
Image Source: ASML Holding NV – Fourth Quarter and Full-Year 2020 Earnings IR Presentation. Shares of Netherlands-based ASML Holding N.V., which supplies lithography systems and services to the semiconductor industry, have done incredibly well since we published our note, "ASML Holding Is an Impressive Enterprise with a Pristine Balance Sheet and Rock-Solid Growth Trajectory" article back on April 8, 2020. From April 8 to January 22, shares of ASML more than doubled. We strongly encourage members that have not done so to check out that article, as we laid out how ASML Holding’s lithography systems are an essential part of the semiconductor industry along with our reasoning behind why we view the company’s long-term outlook favorably. We continue to be fans of ASML Holding’s business model. As a leader in an industry supported by numerous secular growth tailwinds (secular trends, such as the rise of AI and cloud-computing, support the outlook for semiconductor demand which in turn supports the outlook for the cutting edge lithography systems used to make these semiconductors), ASML Holding is poised to continue to generate strong revenue growth while maintaining its pricing power.

Jan 24, 2021

Best Idea Vertex Pharma Is an Intriguing Biotech Play
Image Shown: A snapshot of Vertex Pharmaceuticals Inc’s approved therapeutic offerings and its drug pipeline. Image Source: Vertex Pharmaceuticals Inc – January 2021 IR Presentation. Vertex’s market leading position in the cystic fibrosis ('CF') therapeutics space underpins our expectations that its free cash flow will grow at a brisk pace going forward (supported by the potential for the company to expand into new markets and the potential to grow the application of its CF portfolio). We also like Vertex’s exposure to gene therapies via its partnership with CRISPR Therapeutics. Vertex’s existing drug pipeline is decent, and the biotech has the ability to use its net cash position to bulk up its drug pipeline even further if needed (through a strategic partnership, acquisition, purchase of drug development rights, etc.). Though we generally don't get too excited about biotech plays given their speculative nature, the difficulty in predicting the success of drugs in their pipeline, and the potential for shareholder dilution via new equity issuance, Vertex’s financial position is rock-solid, its outlook is bright, and we like having exposure to the company in the Best Ideas Newsletter portfolio.

Jan 22, 2021

Dividend Increases/Decreases for the Week January 22
Let's take a look at companies that raised/lowered their dividend this week.

Jan 11, 2021

Energy Sector In Shambles, Looks to Recover But Headwinds Persist
Image Source: ConocoPhillips – November 2019 Analyst and Investor Meeting IR Presentation. Though raw energy resource pricing is on the rebound, the outlook for the oil and gas industry remains stressed. Global demand for oil and related refined petroleum products remains subdued due to headwinds generated by the ongoing coronavirus (‘COVID-19’) pandemic. The OPEC+ oil cartel has responded by pledging to keep a significant amount of oil output off the market for an extended time. However, raw energy resource prices need to go much higher and be sustained at elevated levels before the space could become attractive from a longer-term perspective. In our view, the US upstream industry (specifically those in the shale patch) need WTI to move and stay north of $60 per barrel to be in a position to generate meaningful free cash flow while also investing enough to maintain their production bases. We think the dividends at the oil majors may be at risk, even Exxon’s, and we include two high-risk midstream stocks in the High Yield Dividend Newsletter portfolio to capture a relatively benign risk-reward scenario when it comes to their respective yields. We maintain a cautious view on the MLP business model, more generally, however. For now, we are keeping a close eye on the energy sector considering things are slowly moving in the right direction. However, given the collapse in raw energy resources pricing witnessed during the first half of 2020, the industry still has a long way to go before it is out of the woods, so to speak.

Dec 22, 2020

Lockheed Makes an Intriguing Acquisition
Image Source: Lockheed Martin Corporation – December 2020 IR Presentation covering Lockheed Martin Corporation’s pending acquisition of Aerojet Rocketdyne Holdings Inc. On December 20, Lockheed Martin Corp announced it was acquiring Aerojet Rocketdyne for $56.00 per share in cash, or $51.00 per share after taking into account a special $5.00 per share pre-closing cash dividend payment that Aerojet Rocketdyne plans to pay out. The deal has a total equity value of ~$5 billion when including the special dividend component and is expected to close in the second half of 2021. In our view, this deal is highly complementary to Lockheed Martin’s existing operations. Combining Aerojet Rocketdyne’s propulsion and power systems business segments with Lockheed Martin’s expansive aircraft, helicopter, missile, space, maritime, and weapon systems business segments should lead to sizable operational and developmental synergies.