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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,
Mylan Surges, Why Fair Value Estimates Matter
July 30, 2019
Image Source: Mylan NV – IR Presentation By Callum Turcan On July 29, Mylan NV (MYL) agreed to merge with Pfizer Inc’s (PFE) Upjohn unit to form a much larger and more diversified entity in the pharmaceutical industry, selling such products as Mylan’s EpiPen and Pfizer’s Viagra. Shares of MYL jumped by a double-digit percentage on the news, and we aren’t surprised given how Mylan has traded well below our $31 per share fair value estimate for some time now. What Mylan needed was a catalyst to get the market to take notice (of its estimated future free cash flows), and Pfizer seems to have offered it one by renewing investor interest in the name. Pro forma for this transaction,
Google, Intel — Yes!
July 25, 2019
Google, Intel — Yes! — Let’s talk Google and Intel, remind you that we’ve removed Chipotle, Xilinx, and Boeing from the newsletter portfolios some time ago. I’ll talk a little about PayPal’s run higher and address some other themes, including contingent liabilities with J&J and 3M. — By Brian Nelson, CFA — We don’t get everything right, of course, but lately, we’ve been really doing a great job getting the right ideas in front of you! I’m super proud of our team at Valuentum, and I hope that you are capitalizing on our research. — In a prior article, I talked about how Facebook (FB) and Visa (V), two top-weighted ideas in the Best Ideas Newsletter portfolio, were on fire
Viewing Intrinsic Value as a Range of Outcomes: Tesla’s Margins Come Under Fire in Second Quarter, Shares Sell Off
July 25, 2019
By Callum Turcan On July 24, Tesla Inc (TSLA) posted second quarter 2019 earnings that did not go over well with investors. For starters, the electric vehicle maker’s company-wide GAAP gross margin tanked by ~100 basis points while Tesla’s ‘Automotive’ segment’s gross margin came in at 18.9% during the quarter, down ~170 basis points from 20.6% in the same period last year. This is entirely a result of Tesla ramping up production and deliveries of the less profitable Model 3 to meet demand while production and deliveries of its higher margin Model S/X move lower. Shares of TSLA are under considerable pressure as the market adjusted its long-term view of Tesla’s gross margins and ultimately future free cash flows. Here
Coca-Cola, Visa, and More from Valuentum
July 25, 2019
Coca-Cola, Visa and More from Valuentum — Hi everyone, — Hope you’re doing great. — Just yesterday, we closed out six more ideas in the Exclusive, four capital appreciation ideas and two short-idea considerations, for solid “gains.” The success rates in the Exclusive publication continue to be fantastic. I encourage members to upgrade, to give the Exclusive a chance, to see if the ideas may be of interest. Subscribe to the Exclusive publication here. — Facebook’s Meteoric Rise — Image: The market doesn’t offer opportunities like this every day. I’d say we might see something so obvious, so opportunistic, maybe once every couple years. That was Facebook in late 2018. It’s now up 60%+ from its 52-week low. — We have a lot
Best Ideas Holding Visa Posts a Great Quarter, We Continue to Like the Name
July 25, 2019
Image Source: Visa Corporation – IR Presentation By Callum Turcan One of our favorite companies out there and a top holding in the Best Ideas Newsletter portfolio, Visa Corporation (V) reported fiscal third quarter FY2019 earnings on July 23 that were overall a net positive. Shares initially sold off on July 24 before recovering throughout the trading session and ended up over 1%. At the upper end of our fair value estimate range, we value Visa at $184 per share, and while Visa has performed tremendously since we added it to our Best Ideas Newsletter portfolio, we remain confident that shares have room to climb higher. Please note that Visa’s fiscal third quarter for fiscal year 2019 ended on June
