Fundamental data is updated weekly, as of the prior weekend. Please download the Full Report and Dividend Report for any changes.
Latest Valuentum Commentary
Feb 24, 2020
ALERT: Adding Market Crash 'Protection,' Removing MSFT, BKNG
Image source: Centers for Disease Control and Prevention. We're adding out-of-the-money put options to both the Dividend Growth Newsletter portfolio and Best Ideas Newsletter portfolio. We're removing Microsoft from the Dividend Growth Newsletter portfolio, and we're removing Booking Holdings from the Best Ideas Newsletter portfolio. We reiterate that, had the Dow Jones Industrial Average already swooned a couple thousand points on news of the COVID-19 outbreak, we might have considered some undervalued stocks with strong momentum potential "buying opportunities." However, to this point in time, the markets have largely ignored COVID-19, with major US indices still sitting near all-time highs. We could be in for a wild ride in the coming weeks and months, and an outright market crash is not out of question. For those looking for short-idea considerations, please consider the Exclusive publication here. We remain fully-invested in the High Yield Dividend Newsletter portfolio given its yield and income focus.
Feb 22, 2020
Is a Stock Market Crash Coming? -- Coronavirus Update and P/E Ratios
Image Source: World Health Organization, Coronavirus disease 2019 (COVID-19), Situation Report -- 32. We don’t think this is the environment to put new capital to work, and we remain highly cautious of what COVID-19 means for global economic growth not just in the first quarter of 2020 but for the rest of this year (maybe longer). Right now, the US markets are not really factoring in anything related to COVID-19, and perhaps may be adjusting to China’s stimulus in artificially propping up the markets as if the outbreak is somehow a “positive thing.” With the S&P 500 trading at 19.0 forward earnings estimates--estimates that are likely too high given the evidence we are seeing with respect to a slowdown due to COVID-19--and corporate debt levels more elevated than ever before (note, a high net debt level should depress the P/E in enterprise valuation--US corporate debt has advanced 50% over the past decade, to $10 trillion), it is our contention that the current market reflects a “situation-equivalent” forward P/E (i.e. rightsizing for new net debt relative to the dot-com peak and adjusting for lower forward earnings expectations compared with current forecasts) perhaps greater than 24.4, which was recorded at the peak of the dot-com bubble. Though interest rates are lower than they were at the time of the dot-com crash, suggesting a modest reasonable bump to normalized forward P/E ratios of ~15 times to reflect “fair valuations,” we could seriously be in for fundamental-driven crash soon, as both the earnings multiple and earnings estimates contract aggressively. Hypothetically, a contraction to a 16x forward multiple on earnings estimates just 10% lower than currently forecast implies an S&P 500 of 2,566, or a swoon of about 20%-30% from current levels--and that would just get us down to 16x still-respectable forward numbers. How quantitative-driven price-agnostic trading may impact this scenario is not known either, and all of this could be setting up for a wild ride in the coming weeks and months. Fasten your seatbelts. We’ll have a few newsletter portfolio alerts coming Monday.
Feb 10, 2020
‘Value Trap’ Shoots and Scores!
Author Brian Nelson is the President of Investment Research at Valuentum. In his role, he has updated and overseen over 20,000 discounted cash flow models during the past 10 years. Prior to Valuentum, he worked as the Director of Methodology at Morningstar, a large independent research firm in Chicago, developing the company’s discounted cash-flow model used to derive the fair value estimates for the company’s coverage universe.
Jan 23, 2020
Resetting Your Mental Model
Image Source: affen ajlfe. Having the right mental model and using the right information can be the reason why you win or lose in investing.
Jan 4, 2020
Valuentum Exclusive Success Rates Trump Even the Best Quant Hedge Funds
Image: President of Investment Research Brian Nelson, CFA. A new book, “The Man Who Solved the Market,” hit bookshelves last year, and thus far it has been a hit. The text goes into the story of quant hedge fund Renaissance Technologies and its hedge fund, the Medallion Fund, which has put up mammoth returns since inception.
Dec 25, 2019
5 Things We Learned in 2019
Image: The Smoky Mountains of Tennessee. "The further a society drifts from the truth, the more it will hate those that speak it." -- George Orwell
Nov 27, 2019
ICYMI: Watch Valuentum's Presentation on 'Value Trap' Now!
YOU WILL LEARN --- * The pitfalls of valuation multiple analysis and the risks of extrapolating some empirical quantitative conclusions. * A critical framework to view and interpret stock price movements and stock valuation. * The universal nature of enterprise valuation to all things finance from competitive advantage analysis to dividend-growth investing and beyond.
Nov 20, 2019
Economic Commentary: Marks, Dalio, and the Discount Rate
Image Source: Mike Cohen. We sat down with the Valuentum team to discuss their latest thoughts on recent economic developments. To kick off the conversation, let’s start with the team’s views on the latest memo from Oaktree’s Howard Marks: Mysterious. For those that don’t know Howard, he is the Director and Co-Chairman of Oaktree, which managed about $122 billion in AUM, as of September 2019. The memo goes into depth on the reasons for negative interest rates, the impact of negative interest rates, and opines on whether the US will ever see negative interest rates. Then, we’ll go from there!
Nov 13, 2019
Keurig Dr Pepper Is Moving in the Right Direction
Image Source: Keurig Dr Pepper – September 2019 IR Presentation. Unlike some of its peers, Keurig Dr Pepper is not trading at a hefty premium to its intrinsic value. Our fair value estimate for shares of KDP stands at $25, with the top end of our fair value estimate range sitting at $30 per share. As of this writing, KDP trades near ~$29 per share, which is within reason in our view. Investors are pricing in Keurig Dr Pepper’s nice underlying sales growth forecast, merger-related synergies, and serious deleveraging efforts which is why KDP trades at the upper end of its fair value estimate range, in our view. We aren’t adding KDP to either of our newsletter portfolios at this time, but should deleveraging activities continue in earnest, that may change our view of the company.
Nov 11, 2019
Our Reports on Stocks in the Nonalcoholic Beverages Industry
Image Source: Mike Mozart. Our reports on stocks in the Nonalcoholic Beverages industry can be found in this article. Reports include CCEP, KO, KDP, MNST, FIZZ, PEP.
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The High Yield Dividend Newsletter, Best Ideas Newsletter, Dividend Growth Newsletter, Nelson Exclusive publication, and any reports, articles and content found on this website are for information purposes only and should not be considered a solicitation to buy or sell any security. The sources of the data used on this website are believed by Valuentum to be reliable, but the data’s accuracy, completeness or interpretation cannot be guaranteed. Valuentum is not responsible for any errors or omissions or for results obtained from the use of its newsletters, reports, commentary, or publications and accepts no liability for how readers may choose to utilize the content. Valuentum is not a money manager, is not a registered investment advisor and does not offer brokerage or investment banking services. Valuentum, its employees, and affiliates may have long, short or derivative positions in the stock or stocks mentioned on this site.