Occidental Petroleum: Flexible Capital Allocation Strategies
January 14, 2019
Image Source: Occidental Petroleum Corporation Occidental Petroleum laid out a plan to generate positive free cash flow at various price points in 2019, and management has shown a willingness to adjust spending levels in the past. Let’s dig into the framework Occidental has established for how it can adjust effectively to changes in raw energy resource prices. By Callum Turcan Capital Spending Changes and Dividend Coverage One of the hardest tasks raw energy resource producers face is managing their cash flow positions. Volatile operating cash flow from upstream operations makes setting capital expenditure budgets and paying out dividends a difficult task, especially if the goal is to cover those cash outlays within internally generated funds. Occidental Petroleum Corporation (OXY) offsets
We Think General Motors Is Poised for New Highs
January 11, 2019
Simulated newsletter portfolio idea General Motors has had one choppy ride since shares were re-released onto the marketplace after the bailout some years ago. The automaker had some good news today, and shares are bouncing nicely in an otherwise weak market. This relative strength is remarkable considering concerns about China’s pace of economic expansion and potential backlash against American icons in the country. Brian Nelson, CFA We think General Motors’ (GM) shares are worth $54 each on the basis of our discounted cash-flow process, and with the company trading in the high-$30s, we think the good times are still ahead. GM is included as an idea in both the simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio.
SMART Global Holdings’ Headwinds Highlight Potential Gross Margin Pressure in Memory
January 11, 2019
Image source: SMART Global investor presentation Shares of data and storage firm SMART Global dropped precipitously following its fiscal 2019 first quarter report. A change in Brazil’s local content rules and higher levels of seasonality have impacted its top-line and gross margin expectations and reduced visibility in its business. Potentially volatile gross margin performance is a key risk of the memory space. By Kris Rosemann Shares of SMART Global Holdings (SGH), a leader in data compute and storage products and solutions, faced significant selling pressure following its fiscal 2019 first quarter report, results released January 8, as a result of expectations for lower top-line performance in its Brazilian operations, which accounted for just over half of fiscal 2019 first quarter
Dividend Increases/Decreases for the Week Ending January 11
January 11, 2019
Below we provide a list of firms that raised their dividends during the week ending January 11. 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 AbbVie (ABBV): now $1.07 per share quarterly dividend, was $0.96. Atco (ACLLF): now CAD 0.4048 per share quarterly dividend, was CAD 0.3766. Bank of America Deposit Shs Repr 1/1200th Fltg Rate Non Cum Pfd Shs Series -2- (BML.PH): now $0.21446 per share quarterly dividend, was $0.19167. Canadian Utilities (CDUAF): now CAD 0.4277 per share quarterly dividend, was CAD 0.3933. Codorus Valley (CVLY): now $0.16 per share
New 10s! — Stock Report Updates — Triage During Market Volatility
January 10, 2019
We have updated our 16-page equity and dividend reports for a number of high-profile companies in our coverage universe and have provided a table summarizing the new fair value estimates, Dividend Cushion ratios, and other key metrics following the updates for your convenience. By Valuentum Analysts We’ve been actively updating select reports through the course of this market swoon, and we have provided the table above for your convenience. Guess what — Facebook (FB) and Google (GOOG, GOOGL) are now registering 10s on the Valuentum Buying Index again! These two companies are also the highest weighted equities in the simulated Best Ideas Newsletter portfolio. There’s a lot of “hair” on both names, given political and regulatory risks, and both may experience
We Still Like PayPal
January 9, 2019
Image shown: PayPal has absolutely trounced the market since we retained it in the simulated Best Ideas Newsletter portfolio after its split from eBay. Simulated Best Ideas Newsletter portfolio idea PayPal has trounced the market by more than 100 percentage points since it split from eBay in July 2015. We continue to like shares. By Brian Nelson, CFA PayPal (PYPL) split from eBay (EBAY) in July 2015, and we couldn’t be more pleased with its performance since then. The company has exceeded the market’s return by more than 100 percentage points. This is simply incredible, and we hope that you are pleased. We’re also liking how a lot of our ideas are acting with respect to relative strength in this
The Intricacies of the Valuentum Process
January 9, 2019
Let’s take a quick overview of the Valuentum processes for capital appreciation and dividend growth with a discussion of how we use the Valuentum Buying Index and the Dividend Cushion ratio. By Brian Nelson, CFA There is a lot behind the Valuentum processes for capital appreciation and dividend growth, respectively, and both the criteria for inclusion to either the simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio are different. Our best ideas at any time, however, are always included in the simulated newsletter portfolios. We use our research as a means to identify new ideas for consideration in the simulated newsletter portfolios, as well as to consider removing ideas from the simulated newsletter portfolios. As it relates to
Catching the Bottom?
January 9, 2019
Image shown: The depths of how far the S&P 500 (SPY) has fallen more recently, and the timing of the decision to move to being “fully invested” in simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio. No Changes to Simulated Newsletter portfolios. This article was sent to members via email January 9. That email can be found at the link that follows this article. By Brian Nelson, CFA On the evening of December 26, we emailed members that we were moving to “fully invested” in both the simulated Best Ideas Newsletter and simulated Dividend Growth Newsletter portfolio. First of all, please let me apologize. I wanted to stay in front of members during one of the most volatile times
Best Ideas Newsletter Idea Dollar General Strong in Difficult Market
January 7, 2019
Image shown: Dollar General has exceeded the market’s return by more than 50 percentage points since being added to the simulated Best Ideas Newsletter in April 2017. The dollar stores are a nice area to be when the economic environment grows more uncertain, and we continue to like Dollar General as the play in this area. It remains a staple in the Best Ideas Newsletter portfolio. By Brian Nelson, CFA There may be one certainty when it comes to the economic environment, and that is uncertainty. The markets have had one of the best bull-runs in history since the doldrums of the March 2009 bottom, and perhaps nobody could have predicted the magnitude of the pace of economic expansion since
Markets Up Big; Upside Volatility
January 4, 2019
Image shown: The S&P 500 ETF (SPY) since August 2017. The index has broken through support and is now bouncing back to resistance. By Brian Nelson, CFA Good morning everyone, Are you watching these markets? This is incredible. The Dow finished down 660 points yesterday (briefly dropping 700 points), and today, the Dow is currently trading up 600 points at the time of this writing. Granted, there was Apple’s (AAPL) poor first-quarter 2019 guidance yesterday and the strong jobs report today, but this volatility is not “normal,” no matter what others are saying. A couple announcements up front. For those that already ordered our book Value Trap, I will send you the pdf download to your email address just to make sure
