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Latest Valuentum Commentary
Jul 12, 2023
Pet Insurer Trupanion’s Business Facing Numerous Challenges; Short Interest at 35%+
Image: Trupanion may be growing its top line like a weed, but its operating losses have been growing, too. Image Source: Trupanion 10-K. The insurance business is a tough one, and medical pet insurance may be even more difficult. A number of dynamics from adverse selection to conflicts of interest to lack of bargaining power within the industry’s structure have plagued Trupanion’s financial performance for years, with the company accumulating significant net losses since inception. We’re huge fans of Trupanion’s moaty network of clients and veterinarians as well as its tremendous top-line growth potential, but veterinarians continue to capture the industry’s economic rents, in our view, to the detriment of Trupanion’s shareholders. Unit economics have not been adding up at Trupanion either, and free cash flow has been meager at best for a very long time. As veterinarian costs continue to rise and the firm receives push back on proposed rate increases, Trupanion’s net losses may continue to mount, and even under optimistic assumptions, Trupanion’s shares could be considered rich.
Nov 21, 2022
Procter & Gamble’s Bright Investor Day Buoys Our Views on Stock
Image: Procter & Gamble has delivered pre-, during, and post-pandemic, and its long-term growth targets remain reasonable, in our view. Image Source: P&G. Procter & Gamble has raised its dividend in each of the past 66 years and has paid a dividend in each of the past 132 years. Though the maker of Pampers, Bounty, Tide, Crest, and a number of other household brands is facing the market realities of inflationary pressures on consumers, input cost headwinds and retailers tightening their inventories, we think it will be able to achieve its core targets for fiscal 2023, while rewarding dividend investors along the way. With shares yielding ~2.6% at the time of this writing, P&G remains a solid income and dividend growth consideration for conservative investors. The high end of our fair value estimate range stands at $158 per share.
Jun 20, 2022
Consumer Staples Struggling with Higher Inflationary Costs, Group Hits 52-Week Lows
Image: The Vanguard Consumer Staples ETF (VDC) has notched a new 52-week low, and investors should note that we don’t think consumer staples entities are immune to an environment of higher inflation, where their price increases may not be fully absorbed by the consumer. Due to the commoditization of many of the goods produced in the consumer staples space, we think the consumer may instead trade down to off-brands or white label (“store brand”) products than pay up for branded merchandise. From where we stand, bellwethers in the consumer staples sector can’t price successfully ahead of inflationary headwinds, and many are experiencing tremendous gross margin pressure. Not only this, but in many cases, we think branded staples are experiencing demand (volume) destruction as consumers balk at price increases that still fall short of offsetting the heightened cost environment. Many consumer staples equities have huge net debt positions and hefty dividend obligations, and while many of the types of products they produce consumers cannot do without, we think we might see the consumer staples group’s share prices come under continued pressure in this market environment and eventually fetch what we think would be a market multiple (roughly three turns of earnings lower, or ~19x earnings to ~16x earnings). Even if this may not happen, however, there still appears to be some tough sledding ahead on a fundamental basis given report commentary, and we’ll look to evaluate our newsletter portfolios and their exposure to the consumer staples arena in the coming weeks to months. What remains clear is that the outlook for many consumer staples entities is not pretty.
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!
Jan 30, 2017
Dividend Increases/Decreases for the Week Ending January 27
Let's take a look at companies raising/lowering their dividends this week.
Feb 1, 2016
Dividend Increases/Decreases for the Week Ending January 29
Let's take a look at companies raising their dividends this week.
Feb 2, 2015
Dividend Increases/Decreases for the Week Ending January 30
Let's take a look at dividend increases/decreases for the week ending January 30.
Jan 31, 2014
Dividend Increases/Decreases for the Week Ending January 31
Let's take a look at dividend increases/decreases for the week ending January 31.
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