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Latest Valuentum Commentary
Apr 29, 2022
Apple Reports Record Services Revenue in Calendar First Quarter 2022, We Still Love Shares!
Image Shown: Apple Inc put up another strong earnings report for the quarter ended March 2022. We continue to like Apple as an idea in our newsletter portfolios. On April 28, Apple reported earnings for its second quarter of fiscal 2022 (period ended March 26, 2022) that beat both consensus top- and bottom-line estimates by a wide margin. Apple also increased its dividend by 5% on a sequential basis and authorized an additional $90.0 billion in share repurchases in conjunction with its latest earnings update. We are big fans of Apple and include shares of AAPL as an idea in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. Shares of AAPL yield ~0.5% as of this writing and we see room for Apple to push through substantial payout increases going forward. Additionally, the top end of our fair value estimate range sits at $204 per share of AAPL, well above where Apple’s stock price is trading at as of this writing indicating it has ample capital appreciation upside potential as well.
Apr 14, 2022
Weekly: We're Bullish on This Self-Inflicted Market Sell-Off; Plus Meta (Facebook), PayPal, Consumer Staples, and HPQ
We have a lot to cover in this week's Valuentum Weekly, but one thing is clear: We remain bullish on stocks for the long run.
Apr 6, 2022
Lululemon Firing on All Cylinders; Shares Recovering
Image Shown: Shares of Lululemon Athletica Inc are recovering in the wake of the company’s recent earnings report. On March 29, Lululemon Athletica Inc reported fourth quarter earnings for fiscal 2021 (period ended January 30, 2022) that matched consensus top-line estimates and beat consensus bottom-line estimates. Lululemon also announced it had initiated a new $1.0 billion stock buyback program after completing its previous program in the first quarter of fiscal 2022. The company issued favorable guidance for fiscal 2022 during its latest earnings update, which helped drive shares of LULU sharply higher during normal trading hours on March 30. Shares of LULU are up more than 20% during the past 52 weeks through the time of this writing, more than doubling the return of the S&P 500 during that time. We value shares north of $400 each at the time of this writing, revealing significant potential upside should price-to-fair value estimate convergence materialize.
Mar 29, 2022
Nike Holding Its Own Against Major Exogenous Shocks
Image Shown: Shares of Nike Inc are on an upward climb again after dropping significantly from November 2021 to March 2022. Nike is holding its own in the face of major exogenous headwinds. The firm’s pivot towards D2C and digital sales are having a powerful impact on its business and underlying financial performance. We appreciate that Nike is a stellar generator of shareholder value, though we caution that inflationary headwinds and supply chain hurdles loom large over its near term outlook, as does the Ukraine-Russia crisis due to rising fuel expenses and the risk that portions of the global economy (particularly developing and emerging markets) may enter a recession. We continue to be bullish on U.S. equities and the domestic economy.
Mar 14, 2022
Valuentum Weekly: Yields on New Series I Savings Bonds Have Soared!
The Dow Jones, S&P 500 and NASDAQ futures are all indicated up Sunday night (March 13), but that may not mean much when trading kicks off tomorrow. The start to 2022 has been one of the worst stretches during the past decade, but broader market indexes still aren't down much, even after factoring in several expected rate hikes by the Fed and economic sanctions on Russia due to the war in Ukraine. According to data from Seeking Alpha, the S&P 500 (SPY), Dow Jones Industrial Average (DIA), and Nasdaq (QQQ) are off ~12%, ~10%, and ~19% so far this year, respectively. However, this weakness compares to (and is inclusive of) incredible 5-year price-only returns on the SPY, DIA, and QQQ of ~77%, ~58%, ~146%, respectively, so it's hard for stock investors to be disappointed in much of anything, even if all they were able to do was match the returns of the S&P 500 the past 5 years. Many, however, unfortunately, diluted those 5-year returns with hefty bond and international exposure and sometimes large AUM fees, so the weakness in 2022 is probably more painful for some than perhaps it should be. In any case, we remain bullish on stocks for the long run, with a heavy bent toward large cap growth and big cap tech with tactical overweight "positions" in big cap energy.
Nov 26, 2021
ICYMI: Time to Consider Buying Chinese Equities? Not Exactly.
Image Shown: Shares of Alibaba Group have plummeted over the past year in the wake of Beijing’s crackdown on China’s domestic tech and fintech titans. Is it finally time to start loading up on Chinese equities? We don't think so.
Jul 26, 2021
Chinese Stocks Getting Hammered
Image shown: A confluence of factors are driving Chinese stocks lower, not the least of which is heightened regulatory concerns.Investing is really simple. You don’t need to find terribly underfollowed ideas to do well, just mispriced ones. For example, Alphabet is up over 80% the past 52 weeks, and the company has been a top weighting in the Best Ideas Newsletter portfolio for some time. Facebook has also been an outperformer. There’s no need to make things complicated. Focus on undervalued stocks on a DCF basis that have strong market support through relative strength or a solid technical breakout--and stay away from those net-debt heavy, low valuation multiple value traps!
Jun 25, 2021
Nike Beats Estimates Aided By Its Omni-Channel Selling Strength
Image Shown: Shares of Nike Inc popped higher after its latest earnings report. On June 24, Nike reported fourth quarter earnings for fiscal 2021 (period ended May 31, 2021) that beat both consensus top- and bottom-line estimates. Shares of NKE popped higher after the report. The top end of our fair value estimate range for Nike sits at $160 per share, meaningfully above where shares of NKE are trading at as of this writing--even after the latest bounce in its stock price.
Jun 24, 2021
Lululemon’s Growth Outlook Is Bright
Image Source: Lululemon Athletica Inc – First Quarter of Fiscal 2021 IR Earnings Infographic. Athleisure wear maker Lululemon Athletica recently reported first quarter earnings for fiscal 2021 (period ended May 2, 2021) that smashed past both consensus top- and bottom-line estimates. Its company-operated stores posted net revenue growth of 106% year-over-year as global economies began to recover from the coronavirus (‘COVID-19’) pandemic. The company’s direct-to-consumer (‘DTC’) net revenue grew 55% year-over-year (the e-commerce side of its business) last fiscal quarter, keeping in mind its DTC business more than doubled its net revenues in fiscal 2020. We were impressed with Lululemon’s latest results, and there could be room for shares of LULU to continue climbing higher. The top end of our fair value estimate range sits at $450 per share (well above where LULU is trading at as of this writing).
Mar 22, 2021
Nike’s Digital Strategy Supports Its Future Revenue Growth and Margin Expansion Prospects
Image Shown: Since announcing the launch of its Consumer Direct Offense initiative in June 2017, Nike has done a stellar job building its omni-channel selling capabilities. The company’s digitally-oriented direct-to-consumer strategy offers it the opportunity to enhance both its long-term revenue growth outlook and operating margin expansion potential. On March 18, Nike reported mixed earnings though its near-term guidance indicates its financial performance will continue to rebound after taking a beating from the COVID-19 pandemic. As of this writing, shares of NKE are trading in the upper bound of our fair value estimate range, indicating shares are roughly fairly valued at this time. The coronavirus (‘COVID-19’) pandemic has made it clear that companies with strong omni-channel selling capabilities are in a much better position than their physical-store dependent peers. Home delivery, curbside pickup, and order online/pickup in-store represent some of the main ways companies are meeting demand received through their digital platforms. E-commerce demand has boomed over the past several quarters and that trajectory has legs, in our view. Though e-commerce was already steadily becoming a larger part of the global economy over the past two decades (adoption rates vary across geographical regions), the pandemic has accelerated that trend. Nike recognized the need to develop omni-channel selling capabilities earlier than most, and part of that strategy involved building out an ecosystem of mobile apps and related websites. The apparel, footwear, equipment, and accessory company announced its ‘Consumer Direct Offense’ initiative back in June 2017 and the goal is to build up a sizable direct-to-consumer (‘DTC’) business with a large e-commerce component. The company has its fitness apps Nike Run Club and Nike Training Club along with the Nike app, which supports its e-commerce operations, and its Nike SNKRS app that focuses on footwear. Its digital strategy also involved Nike parting ways with Amazon a couple of years ago so Nike could better control its digital strategy. On March 18, Nike reported third quarter earnings for fiscal 2021 (period ended February 28, 2021) that saw its ‘NIKE Direct’ sales grow by 20% year-over-year, hitting $4.0 billion.
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