Valuentum’s Brian Nelson to Present at CFA Society of Houston
February 27, 2017
Event Description: Mr. Nelson will walk through his experiences in valuation and financial statement analysis within the stock selection process to help portfolio managers learn how to optimize the strength and resilience of client portfolios–those either built for capital appreciation or income, or both. The centerpiece of the presentation will be a discussion on midstream corporate Kinder Morgan (KMI) and the master limited partnership (MLP) business model, in general, and how applying tried-and-true financial statement, valuation, and credit analysis (in the Valuentum approach) put portfolio managers far ahead the dividend/distribution cuts and the massive slide in share prices… To learn more >> To register >> This event is hosted by the CFA Society of Houston.
Recent Material Fair Value Estimate Changes
February 27, 2017
By Kris Rosemann Let’s begin this edition of ‘Recent Material Fair Value Estimate Changes’ with a discussion of some of the highest-profile names that made the list. If you require background reading on why we make changes to our valuation models, please see: What Causes Fair Value Estimates to Change? We’ve raised our fair value estimates for two of the holdings in the newsletter portfolios, General Electric (GE) and Union Pacific (UNP). The sprawling and evolving industrial portfolio of General Electric is one of the more exciting portions of our portfolios, as the industrial giant boasts assets with authoritative positions in areas from the rapidly expanding Industrial Internet of Things to the rebounding energy services space. An increase in near-term
Average Check Increases Driving Results for Cracker Barrel
February 24, 2017
Image Source: Mike Mozart Dividend Growth Newsletter portfolio holding Cracker Barrel drove average check increases to combat weak traffic that continues to plague the restaurant space. By Kris Rosemann Cracker Barrel Old Country Store (CBRL) reported its eleventh consecutive quarter of positive comparable restaurant sales growth in the second quarter of its fiscal 2017 on February 21. We continue to be fans of its dividend growth profile–its Dividend Cushion ratio is a healthy 1.7–and shares are trading in the lower bound of our fair value range. The company’s unique concept is working wonders on its ability to raise prices and offset industry-wide traffic woes that have weighed on the majority of the US restaurant space. During the quarter, Cracker Barrel’s
Is Clean Energy Just Burning Cash?
February 23, 2017
Image Source: Chuck Coker Clean or renewable energy sources will undoubtedly be a part of how we generate power in the future, but how investible is the space? The answer is largely dependent on your risk tolerance. Key Takeaways: The success of the solar industry at this point in time is dependent on public policy, specifically investment tax credits, which allow participants to compete with traditional energy sources. The wind power industry is more developed than the solar industry, though many of the largest players in the industry are large utility holding companies. There are a wide range of ideas ancillary to the renewable energy movement in the areas of emissions reduction, power storage, and energy efficiency. By Kris Rosemann
PBMs: Express Scripts and CVS’ Looming Victory?
February 23, 2017
Image Source: Victor We’re expecting a big win at CVS in coming years, and it may come at the expense of Express Scripts. By Alexander J. Poulos With the recent addition of CVS Health (CVS) to the newsletter portfolios, we believe the sell off in the Pharmaceutical Benefit Managers (PBM) industry is overdone. We are intrigued by the free cash flow generated from a highly-predictable business model, and that the PBM’s negotiate contracts in advance, locking in a customer for an extended period, only adds to the attractiveness of their operations. Another PBM, but a pure play, is Express Scripts (ESRX). Let’s discuss the unique characteristics of Express Scripts along with notable risks, which prevented us from adding the name
3 Critical Drug Approvals For Your Radar
February 23, 2017
What can investors expect when it comes to imminent drug approvals? Let’s cover three important ones. By Alexander J. Poulos The drug discovery process is a tedious multi-step process that is fraught with peril. The design of the clinical trials remains very costly with little in the way of assured success. Companies that can successfully shepherd through a compound are often rewarded a lucrative patent that allows for monopoly-like margins for a limited time. We monitor the drug-discovery process closely, with a particular emphasis on PDUFA (Prescription Drug User Fee Act) dates. A PDUFA date is when the FDA needs to rule whether or not a new drug application will be approved and become available to the market. A delay
Johnson & Johnson’s Oncology Division A Force to Be Reckoned With
February 18, 2017
Healthcare and consumer staples giant Johnson & Johnson is a core holding in both newsletter portfolios. Let’s take a deep dive into one of its key sources of growth, its ‘Pharmaceutical’ segment. By Alexander J. Poulos and Kris Rosemann Consistency of returns is one of the hardest goals to achieve in the investment world. Often, one of the key components when selecting equities to build a long-term portfolio is their respective durability through the ups and downs of the economic cycle (in portfolio theory their collective performance would matter). A company that is able to generate resilient returns under various conditions often has a business model with defensive characteristics and an attractive Economic Castle. Johnson & Johnson (JNJ), the consumer
Cisco Accelerating Recurring Revenue Base, Raises Dividend Double Digits
February 17, 2017
Image Source: Brandon Leon.
Newsletter portfolio holding Cisco continues to transition its business to a software and subscription-based model. Let’s take a look its progress as of its second quarter of fiscal 2017.
Notice: Website Under Construction
February 15, 2017
Image Source: TriangleREVA Notice: Our hosting provider is currently updating our website to apply a new SSL certificate to comply with a recent Google update. You may receive a message that “Your connection is not private.” in the meantime. The website will soon be located using https://. We apologize for any inconvenience.
Gilead Sciences Continues Its Meltdown
February 15, 2017
Valuentum has been out of Gilead in the newsletter portfolios for some time. As the Best Ideas Newsletter portfolio continues to make new highs, Gilead continues to set new 52-week lows. This is the power of “portfolio thinking,” something we’ve been preaching for a long time. By Alexander J. Poulos Gilead Sciences (GILD) burst into the mainstream in 2015 due to its aggressively priced treatment for hepatitis C (HCV). The company gained notoriety as it priced the treatment at $1,000 per tablet, garnering scorn from politicians on both sides of the political aisle. The original treatment (Sovaldi) was improved on with Harvoni, as Gilead ushered in a new age of cures for a dreaded infectious disease. The difficulty in modeling
