Join the Conversation on the Market Plunge
August 7, 2019
The Valuentum team shares its thoughts on the recent surge in volatility and collapse in interest rates amid a trade and currency war between two of the largest economies in the world, the US and China. No changes to the newsletter portfolios at this time. During the past few days, the US (SPY, DIA) and China (FXI, MCHI) have escalated a trade war, turning it into a currency war, the latter allowing its yuan to drop to lower levels against the U.S. dollar. The US has now labeled China a “currency manipulator,” and China has responded by suspending U.S. agricultural purchases. China is one of the largest buyers of U.S. agricultural goods. The Valuentum team builds on its previous conversation
Sprouts’ Growth Spurt Followed by Weak Operating Margins and Terrible Guidance
August 7, 2019
Image Source: Sprouts Farmers Market Inc – IR Presentation By Callum Turcan Sprouts Farmers Market Inc (SFM) is a grocery chain that focuses heavily on selling organic foods, healthy foods, and other higher priced items in nearly two dozen US states through 331 stores as of August 1. The company does not pay out a common dividend at this time, and please keep in mind Sprouts’ fiscal year and calendar are slightly different (fiscal year 2018 ended on December 30). While Sprouts has a lot of room to grow as it enters new domestic markets, we caution that the company is operating in a very competitive industry and shares of SFM already appear fully valued, if not generously valued, as
Realty Income Posts Solid Earnings, Acquires Overseas Real Estate for First Time
August 6, 2019
Image Source: Realty Income Corporation – IR Presentation By Callum Turcan Realty Income Corporation (O) is a REIT focused on free-standing, single-tenant commercial properties in 49 US states, Puerto Rico, and now the UK. At the end of the second quarter of 2019, Realty Income had economic interests in almost 6,000 properties. The REIT reported second quarter earnings on August 5, and we liked what we saw. Realty Income is included in our Dividend Growth Newsletter portfolio and shares of O yield 3.9% as of this writing. Please note that the REIT pays out a monthly dividend and has been doing so for 589 consecutive months (~49 years). Financial Overview As you can see in the graphic below, Realty Income
Oil Major Second-Quarter 2019 Earnings Roundup
August 6, 2019
Image Source: Exxon Mobil Corporation – IR Presentation By Callum Turcan Earnings Coverage by Ticker: BP, COP, CVX, RDS.A/RDS.B, TOT, XOM Let’s look at the Oil Majors that have recently reported earnings. BP’s Upstream Operational Execution Remains Strong On July 30, BP plc (BP) reported non-GAAP flat year-over-year underlying replacement cost profit of $2.8 billion in the second quarter of 2019. Marginal reductions in operating income from its upstream and downstream segments were offset by a reduction in corporate-level expenses. BP owns a 19.75% stake in Rosneft (OJSCY) which saw earnings move lower in the second quarter by an estimated ~25%. Unlike its peers who generally reported significant weakness at their downstream operations (refining, petrochemicals, marketing, and retail operations), BP’s
Markets Crumbling Under Trade War
August 5, 2019
Markets Crumbling Under Trade War — Just a reminder to lock in the Exclusive today. The price of the publication will go up tomorrow. The Exclusive highlights an income idea, a capital-appreciation idea, and a short idea each month. It is limited to 1,000 subscribers. Learn more here. — By Brian Nelson, CFA — Stock markets around the globe are under considerable pressure during today’s trading session, August 5, as onlookers no longer have faith that the White House and China officials are being truthful about the progress of trade talks. We think credibility is severely damaged, and China letting the yuan decline against the US dollar suggests the country may go to just about any lengths to defend itself against US
Order The Exclusive Today!
August 2, 2019
Already a member to the Exclusive publication? View the Exclusive website here. You Asked, We Answered: The Exclusive From the Valuentum Team each month, receive three investing ideas for consideration (one for income, one for capital appreciation, and a “short” idea consideration), fully-laid out in thesis form. Offer is limited to the first 1,000 Valuentum members. Reserve your spot today. “The stock market is a no-called-strike game. You don’t have to swing at everything—you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, “Swing, you bum!” — Warren Buffett Hi everyone, We can’t be more pleased with the reception we have received from the investment community the past 10+ years, and
How About the New Vette? General Motors Bouncing Back
August 1, 2019
Image Source: GM Chevrolet Next-Generation Corvette, 2020 Stingray revealed July 18 Shares of General Motors held up well in an otherwise weak market August 1 after posting a solid second quarter 2019 earnings report. By Callum Turcan A holding in both our Dividend Growth Newsletter and Best Ideas Newsletter portfolios, General Motors (GM) held up well August 1 after reporting a nice earnings beat with revenue coming in-line with consensus analyst estimates. GM’s North America division led the way, aided by its all-new Chevrolet Silverado and GMC Sierra offerings taking market share in the pickup truck market (according to third-party data cited by GM). GAAP revenue declined by 2% year-over-year and non-GAAP adjusted EBIT moved lower by 6%, but GM’s
Quad/Graphics Skyrockets After Earnings
August 1, 2019
Image Shown: Shares of Quad/Graphics Inc (QUAD) have tumbled over the past year due to concerns regarding the secular decline in the printing business and its now terminated all-stock deal to acquire LCS Communications Inc (LKSD). On July 31, shares of QUAD leaped higher after reporting second quarter 2019 earnings on July 30. By Callum Turcan Quad/Graphics Inc (QUAD) is a printing company seeking to shift towards advertising & marketing offerings that are better suited for the digital age. Most of Quad/Graphics’ revenue is generated in the US. The company mentions in its 2018 10-K filing that “the printing industry… is in secular decline” while the US advertising is expected to grow by 4% CAGR from 2018 – 2022 according
Apple Breaking Out After Hours!
July 30, 2019
Alert — Apple Breaking Out After Hours! Apple is a top-weighted idea in the Best Ideas Newsletter portfolio and is also a mid-weighted idea in the Dividend Growth Newsletter portfolio. We added to Apple in both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio in December 2018, and we added to it yet again in April 2019. We continue to like shares and value them at ~$220 each. We expect a modest upward revision following the report. — By Brian Nelson, CFA — Before we get started talking about Apple (AAPL), its fiscal third-quarter report released after the close, I wanted to alert you to our views on McDonald’s (MCD) and point to some of the great calls
McDonald’s Not on the Value Menu
July 30, 2019
We can’t get anywhere close to McDonald’s share price with our discounted cash-flow valuation process. That doesn’t mean that shares are destined to fall, but it may indicate that the stock has pulled forward future returns. In any case, investors in McDonald’s should be cautious. By Brian Nelson, CFA McDonald’s (MCD) has done a wonderful job in years past, pursuing all-day breakfast and transitioning (even) more to a franchise business model, but these changes are now behind the fast-food restaurant. Our fair value estimate for McDonald’s is in the mid-$150s (its shares are trading over $200), and frankly, we’re having a very difficult time coming anywhere close to how high the market is valuing shares. During the firm’s second-quarter results,
