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Latest Valuentum Commentary
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."
Mar 10, 2021
Johnson & Johnson’s COVID-19 Vaccine Gets the Green Light
Image Shown: We include Johnson & Johnson as an idea in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios. The health care giant is home to over two dozen ‘platforms/products’ that generate $1.0+ billion in annual sales, as you can see in the above graphic. Recently, Johnson & Johnson’s COVID-19 vaccine received emergency use authorization from the US CDC, which will provide public health authorities with another arrow in their quiver as it relates to bringing an end to the public health crisis. Image Source: Johnson & Johnson – Fourth Quarter of 2020 IR Earnings Presentation. At the end of February 2021, the US Centers for Disease Control and Prevention (‘CDC’) gave emergency use authorization for the single-shot vaccine developed by Janssen, a subsidiary of Johnson & Johnson, to inoculate patients aged 18 years and older from the coronavirus (‘COVID-19’). We have been covering this story for some time and are delighted to see that Johnson & Johnson’s COVID-19 vaccine crossed the finish line. Having another safe and viable COVID-19 vaccine at their disposal should go a long way in assisting global health authorities in eventually bringing the pandemic under control. We covered the interim safety and efficacy data from Johnson & Johnson’s Phase 3 COVID-19 vaccine clinical trial previously. Johnson & Johnson is included as an idea in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios, and we continue to like exposure to the name. The top end of our fair value estimate for JNJ sits at $172 per share, and we are big fans of its promising dividend growth trajectory. Shares of JNJ yield ~2.6% as of this writing.
Feb 21, 2021
Johnson & Johnson’s COVID-19 Vaccine Candidate Nears the Finish Line
Image Source: Johnson & Johnson – Fourth Quarter of Fiscal 2020 IR Earnings Presentation. We appreciate all the hard work Johnson & Johnson and its partners have put towards developing a safe and viable COVID-19 vaccine candidate. Johnson & Johnson issued favorable guidance for fiscal 2021 when it reported its latest earnings aided by expectations that its medical devices business will recover this fiscal year along with sustained strength in its core pharmaceutical sales according to management commentary given during the related earnings call. We continue to like exposure to Johnson & Johnson in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios.
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 3, 2021
Eli Lilly and Vertex Pharma Provide Promising Guidance for 2021
Image Shown: An overview of Vertex Pharmaceuticals Inc’s drug pipeline and commercialized drug portfolio. Image Source: Vertex Pharmaceuticals Inc – Fourth Quarter of 2020 IR Earnings Presentation. There are many attractive opportunities in the healthcare sector. Vertex Pharma is our favorite biotech play, and we are intrigued by the potential upside its strategic partnership with CRISP Therapeutics could generate. Additionally, we like the broad exposure to an attractive sector that the Health Care Select Sector SPDR ETF (XLV) provides the newsletter portfolios. The end of the COVID-19 pandemic will make conducting non-COVID-19-related clinical trials an easier task over the long haul, which supports the outlook for the pharmaceutical and biotech industries. We are also big fans of Johnson & Johnson, which is included in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios, and UnitedHealth Group, which is included in the Dividend Growth Newsletter portfolio.
Jan 29, 2021
Repub from March 5, 2018: The Tragedy of Quantitative Finance
-- Okay – it’s not 2038, but just imagine if this could happen…
Jan 27, 2021
ALERT: Raising Cash in the Newsletter Portfolios
Our research has been absolutely fantastic for a long time, but 2020 may have been our best year yet. With the S&P 500 trading within our fair value estimate range of 3,530-3,920 (and the markets rolling over while showing signs of abnormal behavior), we're raising the cash position in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to 10%-20%. For more conservative investors, the high end of this range may even be larger, especially considering the vast "gains" from the March 2020 bottom and the increased systemic risks arising from price-agnostic trading (read Value Trap). The individual holdings will be reduced in proportion to arrive at the new targeted cash weighting in the respective simulated newsletter portfolios. The High Yield Dividend Newsletter and Dividend Growth Newsletter are scheduled for release February 1. We'll have more to say soon.
Jan 15, 2021
Steris Ties the Knot with Cantel Medical
Image Shown: Cantel Medical Corp is getting bought out by Steris PLC through a cash-and-stock deal. The image up above highlights Cantel Medical’s promising long-term growth outlook, though its performance in 2020 was subdued due to headwinds created by the coronavirus (‘COVID-19’) pandemic. In our view, Steris was attracted to Cantel Medical’s improving outlook (the latter started to stage an impressive rebound in the second half of calendar year 2020) and the ability for the combined firm to generate substantial synergies. Image Source: Cantel Medical Corp – December 2020 IR Presentation. On January 12, Steris PLC announced it had reached an agreement with Cantel Medical to buy the company through a cash-and-stock deal worth ~$3.6 billion (~$4.6 billion when including the assumption of debt and convertible notes) that valued CMD at $84.66 per share based on the closing price of STE on January 11. The deal includes $16.93 in cash and 0.33787 share of STE for each share of CMD. Steris is heavily focused on sterilization products for hospitals and laboratories (it also provides related services). The company intends to fund the cash component of its deal for Cantel Medical with new debt issuance and committed bridge financing, which will also be used to refinance most of Cantel Medical’s existing debt. Shares of Cantel Medical have advanced ~38% (as of the end of normal trading hours January 13) from when we first wrote about the idea back in early December 2020. Even before the acquisition was announced, investors started to warm back up to the company due to expectations that the headwinds that held the firm back last year would start to dissipate this year. In our view, Steris’ acquisition of Cantel Medical is highly complementary. It appears Steris was optimistic that Cantel Medical’s long-term growth outlook remained bright even though the firm had a rough 2020.
Dec 31, 2020
2020 Won’t Soon Be Forgotten
2020 won’t soon be forgotten. The tumultuous year brought with it the greatest shock to the U.S. economy in modern history, ushering in the largest-ever decline in U.S. real annualized gross domestic product of 31.4% in the second quarter of the year (surpassing the prior record of a 28.6% collapse in the second quarter of 1921). Strict lockdowns to help contain the outbreak of COVID-19 created the biggest global health emergency in a century, driving a self-inflicted economic collapse worse than the Great Recession, the Great Depression, and any other recession before it (the Depression of 1873-1879, the Panic of 1893, etc.). Millions were put out of work. During the month of April alone, the economy lost a record 20.8 million jobs, with some estimating that the “real” unemployment rate during the depths of the COVID-19 crisis reached nearly 23%. The official 14.7% unemployment rate in April would obliterate prior post-World War II era records, and while it fell short of the peak Great Depression unemployment rate estimated at 24.9%, the pain of many families and households was no less severe as they battled both a financial and health crisis that materialized in a matter of weeks, with little lead time to prepare for what was to come. Pantry stuffing and panic buying of consumer goods became a sign of the times, and a great debate about the efficacy of wearing masks raged across mediums.
Dec 11, 2020
Dividend Increases/Decreases for the Week December 11
Let's take a look at companies that raised/lowered their dividend this week.
Latest Press Releases
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.