Dollar General’s Promising Growth Outlook
October 12, 2020
Image Source: Dollar General Corporation – Fiscal 2019 Annual Report By Callum Turcan We are big fans of Dollar General Corporation (DG) and continue to like shares of DG as a holding in our Best Ideas Newsletter portfolio. After updating our discounted cash flow model, we increased the fair value estimate and the top end of our fair value estimate range for Dollar General. Under our “bull” case scenario, Dollar General now has a fair value estimate of $223 per share. Even if Dollar General surpasses the top end of our fair value estimate range, we prefer to let our winners run until their technicals turn against them. The latest 16-Page Stock Report covering Dollar General can be accessed here.
The Resilience of the US Digital Advertising Market and Alphabet
October 9, 2020
Image Shown: Shares of Alphabet Inc Class C shares, a top-weighted holding in our Best Ideas Newsletter portfolio, have performed very well over the past year. Going forward, we see room for significant capital appreciation upside as the digital advertising market has proven to be very resilient of late. By Callum Turcan To ride out the ongoing coronavirus (‘COVID-19’) pandemic, we continue to prefer large-cap tech companies with pristine balance sheets, strong cash flow profiles, and promising long-term growth outlooks. Ideally, we are searching for companies with outlooks that are supported by secular growth tailwinds, allowing for several winners in their respective end markets. Digital advertising is a prime example of a resilient high-quality market that is supported by secular
Dividend Increases/Decreases for the Week October 9
October 9, 2020
Below we provide a list of firms that raised their dividends during the week ending October 9. 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 Alpine Banks of Colorado (ALPIB): now $18.00 per share quarterly dividend, was $16.00. Ameren (AEE): now $0.515 per share quarterly dividend, was $0.495. Aon (AON): now $0.46 per share quarterly dividend, was $0.44. Bassett Furniture (BSET): now $0.125 per share quarterly dividend, was $0.080. ConocoPhillips (COP): now $0.43 per share quarterly dividend, was $0.42. Educational Development (EDUC): now $0.10 per share quarterly dividend, was $0.06. Intuit
Nelson: I’m Not Worried About This Market
October 8, 2020
Dear members: — First of all, I wanted to share a heartfelt thank you to all that sent kind words regarding the passing of my brother. My inbox was overflowing with your love and kindness. Len was a great person and my best friend. Without him, I don’t think Valuentum would have come into existence. Your words have been very comforting to me and my family during this difficult time. Thank you again. — With that said, I continue to be bullish on the markets over the long haul. We maintain our view that longer-duration enterprise free cash flows are worth more than they were prior to the COVID-19 market collapse, and valuation adjustments are being reset higher as a
ICYMI: Crisis Outperformance
October 7, 2020
Hi everyone: — If you’ve read Value Trap, you know that I’m partial to the long ball in baseball. There’s nothing quite like hitting a ball square and on the sweet spot of the bat. It’s really something. You hear the crack, but you don’t really feel the contact. It’s smooth, and your adrenaline takes over. When you know you’ve hit it well, it’s going to go. I’m actually a big fan of the bat flip, too. Sometimes, you don’t know you even did it. As the say in the south side of Chicago, “You can put in on the board! Yes!” At Valuentum, we’ve hit some homeruns. We estimate that the Best Ideas Newsletter portfolio generated a hypothetical
Apple’s Growing Financial Tech Business
October 7, 2020
Image Shown: Shares of Apple Inc, a holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios, have surged higher year-to-date. We see room for additional capital appreciation upside. By Callum Turcan We continue to be huge fans of Apple Inc (AAPL), and shares of the tech giant are included as a holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. Our fair value estimate for Apple sits at $140 per share, comfortably above where shares of AAPL are trading at as of this writing, indicating there is room for meaningful capital appreciation upside. Additionally, shares of AAPL yield a modest ~0.7% as of this writing, and we view its forward-looking dividend growth trajectory quite
Third-Level Thinking and “Keynesian Convergence”
October 6, 2020
Image: The analytical process of the Valuentum Buying Index rating system. By Brian Nelson, CFA In the 2011 book, The Most Important Thing, co-founder of asset management firm Oaktree Capital Management, Howard Marks, divided stock market analytics into two levels of thinking, first-level and second-level. Marks used a few examples to explain the difference between these two levels of thinking: First-level thinking says, “It’s a good company; let’s buy the stock.” Second level thinking says, “It’s a good company, but everyone thinks it’s a great company, and it’s not. So the stock’s overrated and overpriced; let’s sell.” First-level thinking says, “The outlook calls for low growth and rising inflation. Let’s dump our stocks.” Second-level thinking says, “The outlook stinks, but
Our Thoughts on the Oil & Gas Industry
October 2, 2020
Image Shown: Crude oil prices, measured by the WTI benchmark, plummeted during the initial phases of the COVID-19 pandemic and have yet to fully recover. Declines in global crude oil prices have depressed prices for natural gas, natural gas liquids, and liquified natural gas as well. We expect that it will take some time for the oil and gas industry to truly recover, and hefty net debt loads combined with onerous dividend obligations are making that a very tough task. Juicy dividend yields are a sign of the headwinds facing the oil and gas industry and are not a sign of strong underlying strength in those firms that are paying out generous dividends. By Callum Turcan Raw energy resources prices
Dividend Increases/Decreases for the Week October 2
October 2, 2020
Below we provide a list of firms that raised their dividends during the week ending October 2. 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 American Financial (AFG): now $0.50 per share quarterly dividend, was $0.45. Bank OZK (OZK): now $0.275 per share quarterly dividend, was $0.273. Boise Cascade (BCC): now $1.60 per share supplemental dividend, was $0.10. Caledonia Mining (CMCL): now $0.10 per share quarterly dividend, was $0.085. Conagra Brands (CAG): now $0.275 per share quarterly dividend, was $0.212. Glacier Bancorp (GBCI): now $0.30 per share quarterly dividend, was $0.29.
ICYMI — News Brief: FDX, CBRL, ADBE, XOM
October 1, 2020
Image Source: Exxon Mobil. The dichotomy in the global economy remains. Restaurants such as Cracker Barrel continue to struggle mightily while those tied to e-commerce proliferation such as FedEx are thriving. Those with strong recurring revenue business models such as Adobe continue to do well, and we remain bearish on the outlook for the energy sector and point to the increased likelihood of Exxon Mobil cutting its payout. By Brian Nelson, CFA FedEx Reports a Blowout Quarter On September 15, FedEx Corp (FDX) reported better-than-expected fiscal first-quarter 2021 results, with revenue, operating income, operating margin, net income and diluted earnings per share up substantially from the same period a year ago. The company noted that volume growth was robust in
