Lululemon Supported by Strong Digital Sales
June 16, 2020
Image Source: Lululemon Athletica Inc – Third Quarter Fiscal 2019 Earnings Infographic By Callum Turcan On June 11, Lululemon Athletica Inc (LULU) reported first quarter fiscal 2020 earnings (period ended May 3, 2020) that missed consensus top- and bottom-line estimates. The company’s strong digital sales were offset by the negative impact of containment efforts to stop the spread of coronavirus (‘COVID-19’), namely store closures (both company-owned and third-party retail locations). Shares of LULU are still up comfortably year-to-date as of this writing, in large part due to its pristine balance sheet and past investments in its digital infrastructure and digital sales channels. We covered these two aspects of its business model and why that would be a source of strength
ICYMI: Survey Coming Later Today, More Market Volatility Expected
June 15, 2020
ICYMI: Survey Coming Later Today, More Market Volatility Expected Image: The market’s levels of volatility so far in 2020 have been among the greatest in history. Expectations for increased volatility in the marketplace as a result of the proliferation of price-agnostic trading (indexing and quantitative trading) is a key theme of Valuentum’s text, Value Trap: Theory of Universal Valuation. We continue to emphasize the importance of due diligence, enterprise valuation, behavioral thinking, the information contained in prices, and stock selection across equity portfolios. Page 256. — Hi everyone, — Hope you all are doing great! — Many of you have already filled out the survey, and I can’t thank you enough for that. For those that may have missed the email housing
Reviewing Oracle’s Cloud Ambitions Ahead of Its Upcoming Earnings Report
June 15, 2020
Image Shown: Oracle Corporation (ORCL) is seeking to take market share in the clouding computing space from Microsoft Corporation (MSFT) and Amazon Inc (AMZN). Image Source: Oracle Corporation – September 2019 Financial Analyst Meeting By Callum Turcan Oracle Corporation (ORCL) is included as a holding in our Dividend Growth Newsletter portfolio. We like the firm’s high quality cash flow profile as that lends support to its Dividend Safety rating, which sits at “GOOD,” and should its Dividend Cushion ratio of 2.7 tick up slightly, Oracle would be in a position to earn an “EXCELLENT” Dividend Safety rating. Shares of ORCL yield ~1.8% as of this writing, and Oracle’s Dividend Growth rating sits at “EXCELLENT” given its promising payout growth trajectory.
Disney’s Outlook is Improving
June 15, 2020
Image Source: Marc Levin and Valuentum added a solid line black border to the image. By Callum Turcan Shares of The Walt Disney Company (DIS) are trading near our fair value estimate of $111 per share, as of this writing, after recovering sharply from their March 2020 lows. Disney’s stock price came under intense pressure from the ongoing coronavirus (‘COVID-19’) pandemic, though the firm’s outlook has improved materially as various economies around the world have started opening back up. We include shares of DIS as a holding in our Best Ideas Newsletter at a modest weighting. Reopening Theme Parks and Resorts On May 27, Disney provided an update on the reopening process for its US theme parks in California and Florida
*ALERT* Scribbles and More Newsletter Portfolio Changes
June 12, 2020
*ALERT* Scribbles and More Newsletter Portfolio Changes Image: Why are stock prices increasing while the near-term economy and near-term earnings outlook isn’t as bright as before…How unlimited quantitative easing, runaway government spending, increased inflation expectations impact equity values…Why this year’s earnings expectations or next year’s earnings expectations don’t matter much…Why Valuentum thinks equity values are rising today, even as the near-term outlook remains unclear. Scribbles on page 76 of Value Trap. — “I know it sounds crazy to say so during a global pandemic and during a recession, but the right multiple and the right earnings to use to value this market is an 18-20x multiple on $196 earnings, putting a fair value range on the S&P 500 today of 3,530-3,920. The
Fastenal Shares Shifting Higher
June 12, 2020
Fastenal is an interesting company and we like the firm’s business model and high quality cash flow profile. The firm’s acquisition of the Apex assets should put Fastenal in a better position to meet the needs of its industrial and construction customer base. Though its near-term operational and financial performance will likely be volatile due to the ongoing pandemic, recent operational improvements and its growing safety supplies business lends some support, as does its strong financials. Fastenal appears well-positioned to ride out the storm with its financials, operations, and dividend intact. By Callum Turcan Fastenal (FAST) is primarily a distributor of industrial and construction products that seeks to provide its customers with a one-stop shopping experience in a vast and
Dividend Increases/Decreases for the Week Ending June 12
June 12, 2020
Below we provide a list of firms that raised their dividends during the week ending June 12. 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 B2Gold (BTG): now $0.02 per share quarterly dividend, was $0.01. Carrier Global Corporation (CARR): now $0.08 per share quarterly dividend. ChipMOS TECHNOLOGIES INC. (IMOS): now $1.2091/ADS dividend, was $0.7639. Cosan Limited (CZZ): now $0.11189896 per share annual dividend, was $0.0822. El Paso Electric Company (EE): now $0.41 per share quarterly dividend, was $0.385. National Fuel Gas (NFG): now $0.445 per share quarterly dividend, was $0.435. NetEase
*ALERT* Newsletter Portfolio Changes
June 11, 2020
*ALERT* Newsletter Portfolio Changes Image: The markets are selling off rather aggressively today, June 11, but it is important to keep things in context. Above, the NASDAQ 100 Index (NDX) just hit all-time highs recently, and some profit taking is to be expected. Though it will make for scary headlines, the move today isn’t out of the ordinary after such a strong run higher. — By Brian Nelson, CFA — We’re making a couple tweaks to the simulated newsletter portfolios today. It has been one of the strongest bull markets we’ve ever seen off the March 23 bottom, and while we continue to be optimistic about some of our favorite ideas, we are now re-positioning the newsletter portfolios after taking advantage of
5 Years Later – #ThrowbackThursday on MLPs
June 11, 2020
Image: Since Valuentum warned against the significant risks of the MLP business model June 11, 2015, on a price basis, the Alerian MLP ETF (AMLP) has fallen by more than 65%, while the S&P 500 has surged nearly 50%. There have been dozens and dozens of explicit (or phantom) MLP distribution cuts since we released our thesis 5 years ago to this day, and many MLPs have subsequently simplified their business models, rolling up into C-corps, as we predicted. By Brian Nelson, CFA 5 years ago, on June 11, 2015, Valuentum released its bearish case on Kinder Morgan (KMI) and the MLPs, a view that was highlighted on Barron’s.com and debated for months thereafter on various social media and website
Data from Visa Indicates the Economic Outlook is Improving
June 11, 2020
Image Shown: Visa Inc reports that US processed transactions volumes across its payment processing network improved materially on a year-over-year basis in May, relatively speaking, versus the downturn seen in the second half of March and the first half of April. Image Source: Visa Inc – 8-K SEC Filing By Callum Turcan One of our favorite secular growth industry tailwinds is happening in the payment processing, payment solutions, and financial technology space. The world is shifting toward a “cashless” society, and that has accelerated due to the ongoing coronavirus (‘COVID-19’) pandemic, in part due to the rise of e-commerce and in part due to the preference of many consumers to use contactless payment options when in physical stores. Visa Inc
