Valuentum Exclusive Analysis for the Discerning Investor

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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.

Nov 1, 2021

Don’t Throw Out These Garbage Stocks
Image Source: Republic Services. We’re huge fans of the waste-hauling industry, and we nailed one of the best-performing ideas in Republic Services for the Dividend Growth Newsletter portfolio. Shares of Republic Services have advanced nearly 40% so far this year, and fundamental momentum has continued in its business, with the executive team raising both adjusted diluted earnings per share guidance and adjusted free cash flow guidance for 2021 when it reported third-quarter earnings. Shares yield ~1.4% at the time of this writing.

Oct 13, 2021

Fastenal’s Latest Earnings Update Indicates US Economic Recovery Continues
Image Source: Fastenal Company – Third Quarter of 2021 IR Earnings Presentation. On October 12, Fastenal reported third-quarter 2021 earnings that beat top-line consensus estimates and matched bottom-line consensus estimates. The company’s latest earnings report reinforces our thesis that the US economy is continuing to recover from the worst of the coronavirus (‘COVID-19’) pandemic. In 2020, Fastenal generated over 85% of its total sales in the US. Fastenal provides products and services in the decentralized maintenance, repair & operation (‘MRO’) industry, a space where the company attempts to gain an advantage over distribution by locating its operations as close as possible to the economic point of contract with its customers. We view Fastenal as a bellwether to broader trends in the industrials sector. With that said, let's dig into its latest report.

Aug 13, 2021

Dividend Growth Idea Republic Services Is a Stellar Enterprise
Image Source: Republic Services Inc – August 2021 IR Presentation. Republic Services recently posted second-quarter 2021 earnings that beat both consensus top- and bottom-line estimates, and its strong performance enabled the firm to raise its full-year guidance (again) for 2021. Furthermore, Republic Services announced it was increasing its quarterly dividend by 8% sequentially on July 29. Shares of RSG yield ~1.5% on a forward-looking basis as of this writing.

Jul 28, 2021

The Valuentum Buying Index’s Flow Chart
Image: The Valuentum Buying Index flow chart. Each stock in our general operating coverage receives a systematically-applied rating. The Valuentum Buying Index is a powerful tool to use in conjunction with a variety of other investment considerations from the Economic Castle, the Dividend Cushion ratio, the fair value estimate and range to forward-looking relative valuation assessments, the dividend yield, dividend growth prospects and beyond. We hope you continue to enjoy your membership, and please let us know if you have any questions.

Jun 16, 2021

Dividend Growth Idea Republic Services’ Solid Long Term Outlook
Image Shown: An overview of Republic Services Inc’s expansive waste management operations across the US. We include shares of Republic Services as an idea in our Dividend Growth Newsletter portfolio. Image Source: Republic Services Inc – May 2021 IR Presentation. The waste management business is highly appealing when it comes to finding potential dividend growth opportunities. Our favorite idea in the space, Republic Services, is included in the Dividend Growth Newsletter portfolio. Shares of RSG yield ~1.5% as of this writing and have been on a nice upward trend during the past few months. The top end of our fair value estimate range sits at $125 per share (RSG trades at ~$110 per share at the time of this writing).

Jun 1, 2021

ICYMI -- Video: Exclusive 2020 -- Furthering the Financial Discipline
In this 40+ minute video jam-packed with must-watch content, Valuentum's President Brian Nelson talks about the Theory of Universal Valuation and how his work is furthering the financial discipline. Learn the pitfalls of factor investing and modern portfolio theory and how the efficient markets hypothesis holds little substance in the wake of COVID-19. He'll talk about what companies Valuentum likes and why, and which areas he's avoiding. This and more in Valuentum's 2020 Exclusive conference call.

May 13, 2021

Markets Back on Track – Seeking Net-Cash-Rich, Free Cash Flow Generators with Pricing Power!
Image Shown: The pricing action of ideas in the Dividend Growth Newsletter portfolio May 13. Image Source: Seeking Alpha.  We remain intensely focused on the cash-based sources of intrinsic value—net cash on the balance sheet and future expected free cash flow—when it comes to identifying price-to-fair-value-estimate mis-pricings as well as in assessing long-term dividend health. We think it may be tempting to rotate into some names where fair value estimate revisions have occurred, but the margin of safety around many energy/commodity producers and banking entities may be too large even for conservative investors. We expect most energy/commodity producers to continue to endure boom-and-bust cycles, and banking entities to do the same, as the latter act more like utilities this day and age. Once implicitly nationalized during the Great Financial Crisis, and used as an extension of government programs such as the Paycheck Protection Program during the COVID-19 crisis, outsize economic profit spreads may remain limited for banks/financials given the punitive regulatory environment. Facebook, of course, remains our top idea for long-term capital appreciation potential. Newmont Mining remains our favorite dividend growth-oriented “inflation hedge” followed by garbage hauler Republic Services and its CPI-indexed contracts. AT&T remains our favorite high yield dividend idea, boasting a free-cash-flow covered ~6.5% dividend yield, and we prefer only diversified exposure to the energy and banking sectors through the Energy Select Sector SPDR (XLE) and Financials Select Sector SPDR (XLF). We’ll be looking to deploy the ~10%-20% cash “positions” in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio in the coming months. The High Yield Dividend Newsletter remains “fully invested,” and Exclusive idea generation remains robust. If you haven’t already, please be sure to have a look at the video in this article to see how we assess the cash flow statement and balance sheet to uncover stocks with strong net cash positions and solid future free cash flows that handily cover expected cash dividend payments. We apply this laser-focus on financial statement analysis across our idea-generation suite of publishing products.

Apr 27, 2021

Trash Is Cash
Image Source: Clyde Robinson. Increasingly valuable disposal capacity that is only becoming scarcer and pricing power across collection and disposal operations that keep inflationary pressures at bay are just two of the reasons why we like the municipal solid waste space. Waste Management’s first-quarter performance showed that the U.S. municipal solid waste industry remains very healthy while free cash flow generation across the group will remain robust and perhaps grow stronger as the U.S. economy continues its recovery. We include Waste Management's peer Republic Services as one of our favorite ideas in the Dividend Growth Newsletter portfolio.

Apr 8, 2021

The Best Years Are Ahead
The wind is at our backs. The Federal Reserve, Treasury, and regulatory bodies of the U.S. may have no choice but to keep U.S. markets moving higher. The likelihood of the S&P 500 reaching 2,000 ever again seems remote, and I would not be surprised to see 5,000 on the S&P 500 before we see 2,500-3,000, if the latter may be in the cards. The S&P 500 is trading at ~4,100 at the time of this writing. The high end of our fair value range on the S&P 500 remains just shy of 4,000, but I foresee a massive shift in long-term capital out of traditional bonds into equities this decade (and markets to remain overpriced for some time). Bond yields are paltry and will likely stay that way for some time, requiring advisors to rethink their asset mixes. The stock market looks to be the place to be long term, as it has always been. With all the tools at the disposal of government officials, economic collapse (as in the Great Depression) may no longer be even a minor probability in the decades to come--unlike in the past with the capitalistic mindset that governed the Federal Reserve before the “Lehman collapse."