RH’s Financials, Long-Term Potential Great But Housing Market and Deteriorating Wealth Effect Pose Risks
January 23, 2022
Image Shown: Shares of RH have exploded higher since the news broke that Berkshire Hathaway Inc had taken a stake in the firm’s equity back in 2019, though shares of RH have shifted lower in recent months. Executive Summary: RH is an innovative home furnishing company that pairs its products with interior/exterior design services to offer a comprehensive package. The company primarily targets affluent households in the US, Canada, and the U.K. RH has tremendous pricing power and its margins have increased significantly in recent fiscal years, even during the COVID-19 pandemic, and its net revenues are trending higher as well. The firm is expanding into the high-end hospitality industry and has several projects that are set to come online
Valuentum’s Brian Nelson in CFA Institute’s ‘Enterprising Investor’
January 21, 2022
From CFA Institute’s ‘Enterprising Investor’: — By Brian Nelson, CFA — “I couldn’t sleep. I knew something was wrong. The numbers just didn’t make sense. For years, pipeline energy analysts seemed to be adjusting their valuation models for pipeline master limited partnership (MLP) stocks in order to explain what was happening to the price. — But why? Why adjust the models for one set of companies and not for another? Cash is cash and value is the measure of cash going into and out of a business. There aren’t different rules for different companies. Valuation is universal.” — To continue reading >> — —– — About Brian Michael Nelson, CFA Brian Michael Nelson, CFAPresident, Equity Research & ETF AnalysisE-mail: brian@valuentum.com Brian
Dividend Growth Idea UnitedHealth’s Growth Story Expected to Continue
January 20, 2022
Image Shown: Shares of dividend growth idea UnitedHealth Group Inc have surged higher over the past year. The company put up solid performance in 2021 and its guidance for 2022 indicates that its growth trajectory is expected to continue. By Callum Turcan On January 19, UnitedHealth Group Inc (UNH) reported fourth-quarter 2021 earnings that beat both consensus top- and bottom-line estimates. The company’s health insurance business is covered by its ‘UnitedHealthcare’ segment, and its health care provider business is covered by its ‘Optum’ segment. Virtually all of the firm’s revenues come from the U.S. It also reaffirmed its guidance for 2022 in its fourth-quarter earnings report. We continue to be impressed with UnitedHealth and include shares of UNH as an
Microsoft Is Buying Activision On Way to Becoming Video Game Giant
January 19, 2022
Image Shown: Microsoft Corporation is buying Activision Blizzard Inc, the largest buyout for a US tech firm ever. Image Source: Microsoft Corporation – January 2022 IR Presentation covering its acquisition of Activision Blizzard Inc By Callum Turcan On January 18, Microsoft Corporation (MSFT) made history by making an all-cash offer to purchase Activision Blizzard Inc (ATVI) for $95 per share. The boards of both companies have already approved the deal. Inclusive of Activision’s net cash position, the deal is worth $68.7 billion which makes it the largest buyout ever for a US tech firm according to CNBC. This deal is expected to close in fiscal 2023 (Microsoft’s fiscal year ends in June). Once it closes, assuming the deal pasts antitrust
The ARKK CRASHED But Large Cap Growth/Tech Is Still Cheap!
January 17, 2022
“The crash in speculative tech, namely the ARKK, is ongoing and expected to continue. On the other hand, blue chip technology, namely the area of large cap growth, is overflowing with moaty, net cash rich, free cash flow generating, secular growth powerhouses and continues to look attractive. On a weighted average basis, for example, the Schwab U.S. Large Cap Growth ETF has considerable room to run higher based on the high end of our fair value estimate range of its largest holdings. We think large cap growth will continue to deliver in the years ahead, and we like exposure to this area.” – Brian Nelson, CFA
Dividend Increases/Decreases for the Week January 14
January 14, 2022
Below we provide a list of firms that raised their dividends during the week ending January 14. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Ally Financial (ALLY): now $0.30 per share quarterly dividend, was $0.25. Alphamin Resources (AFMJF): now CAD 0.03 per share annual dividend. Alpine Banks of Colorado (ALPIB): now $0.18 per share quarterly dividend, was $0.16. Apogee (APOG): now $0.22 per share quarterly dividend, was $0.20. Atco (ACLLF): now CAD 0.4617 per share quarterly dividend, was CAD 0.4483. BlackRock (BLK): now $4.88 per share quarterly dividend, was $4.13.
Valuentum’s Theses on Best Ideas Chevron and Exxon Mobil Playing Out
January 11, 2022
By Callum Turcan Raw energy resources pricing has surged higher during the past year with room to run. The global energy complex is on the rebound as demand for crude oil and refined petroleum products is steadily recovering from the worst of the coronavirus (‘COVID-19’) pandemic. As demand for electricity and heating needs held up well during the pandemic, liquified natural gas prices (‘LNG’) put up a strong year in 2021 and remain elevated. The OPEC+ cartel is committed to slowly phasing out its crude oil supply curtailment agreement first enacted in 2020, effectively limiting growth in global oil supplies at a time when demand is rebounding at a brisk pace. We view the near-term outlook for the global energy
Public Storage Is Simply A Monster REIT Idea!
January 10, 2022
Image Shown: REITs have struggled relative to other investing areas during the past 5 years. Absent the areas of crypto tokens, speculative disruptive innovators and technology, the most prudent area has been large cap growth the past five years, an area that we have been materially overweight in the newsletter portfolios. By Brian Nelson, CFA REIT returns haven’t been that great the past several years (as shown above), but that may be no reason to fret. Some of the top yielding REITs across our coverage include Arbor Realty Trust (ABR), Iron Mountain (IRM), LTC Properties (LTC) and Omega Healthcare (OHI). These REITs come with significantly elevated risk, however. There’s one REIT that may not yield quite as much, but it
High Yielding Philips 66 Has a Solid Plan in Place to Reward Its Shareholders
January 10, 2022
Image Shown: An overview of Phillip 66’s expansive asset base. Image Source: Phillips 66 – November 2021 IR Presentation By Callum Turcan Demand for diesel and gasoline has largely recovered from the worst of the coronavirus (‘COVID-19’) pandemic, though kerosene demand (jet fuel) has a way to go given depressed levels of international travel. The refining giant Phillips 66 (PSX) took advantage of the rebound seen over the past year to pare down its debt levels on a consolidated basis. At the end of December 2020, Phillips 66 had $13.4 billion in net debt (inclusive of short-term debt) on a consolidated basis, which fell down to $12.0 billion in net debt (inclusive of short-term debt) at the end of September
