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August 21, 2015
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The Flight to Safety
August 20, 2015
Image Source: Pravine Chester It’s no secret that investors have been disappointed with returns across the equity market in 2015, and this week has not made the unrest any easier to deal with. Money managers across the globe will be looking at a short-term chart of the S&P 500 (SPY), observing that the broad US index has finally broken down from a critical multi-month base, and many will look to “lighten up” on some of their equity positions that they have been reluctantly “letting run” for months. It is no surprise to us why Netflix (NFLX) was one of the market’s worst performers in Thursday’s trading session. The company is trading at nearly 500 times earnings (not a typo), and the low
Potash Miners Digging Themselves a Hole
August 20, 2015
The global potash industry is a highly profitable one, known for its high margins and high barriers to entry; the former has attracted the investments of high-profile mining companies Rio Tinto (RIO) and BHP Billiton (BHP). This, along with the disbanding of the Belarusian Potash Company has brought about concerns of the stability of the global potash market. The market was formerly dominated–and pricing was more or less controlled–by two informal cartels, the Belarusian Potash Company and Canpotex. Following the disbanding of the former, the competition for pricing power and market share has intensified, and many fear that this will lead to an oversupply in the market. Russian potash producer Uralkali withdrew from the Belarusian Potash Company in the summer
Dark Days Ahead for Walmart?
August 18, 2015
It was widely-reported that Amazon (AMZN) had unseated Walmart (WMT) as the largest broad-based retailer by market capitalization a few weeks ago, and the latter’s second-quarter fiscal 2016 results, released August 18, spoke to the very real risks that the avalanche of social change is having on its business. From what we can gather, Walmart is at the center of a political upheaval in America that is challenging its business model. The company has become the poster child for all of what many workers believe is unfair pay, and such a tainted perception, fair or not, will be difficult to overcome as the ranks of millennials swell and demand their definition of “a living wage” after suffering through a very
Fast Casual Burger Growth Sizzling!
August 17, 2015
The burger market within the restaurant industry is the largest dine-out segment in the US with more than $70 billion in yearly sales. It is estimated to be twice the size of the next largest category, the pizza market, and has proven to be successful around the globe as well, with an estimated global market size of more than $135 billion. We expect overall “burger demand” to continue to increase at a GDP-like pace and generally ebb and flow with the broader economic cycle, as consumers trade-up in good times and trade-down in troubled times. Concept proliferation by new entrants may offer an incremental tailwind to the overall market size, while lower prices at the gas pump have already offered
Dividend Increases/Decreases for the Week Ending August 14
August 17, 2015
Below we provide a list of firms that raised their dividends during the week ending August 14. 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 Avnet (AVT): now $0.17 per share quarterly dividend, was $0.16. Badger Meter (BMI): now $0.20 per share quarterly dividend, was $0.19. Briggs & Stratton (BGG): now $0.135 per share quarterly dividend, was $0.125. Delta Natural Gas Company (DGAS): now $0.205 per share quarterly dividend, was $0.20. Diversified Royalty (BEVFF): now $0.01667 per share monthly dividend, was $0.0157. G&K Services (GK): now $0.37 per share quarterly dividend,
Valuentum Moving to “Neutral” on Kinder Morgan
August 16, 2015
Valuentum is moving to neutral on Kinder Morgan (KMI). An updated 16-page report will be available on our website Monday morning. On June 11, 2015, we published an article “5 Reasons Why We Think Kinder Morgan’s Shares Will Collapse” when shares of the pipeline giant were trading at ~$40. Without reaching out to us first for questions or comments, Barron’s picked up the scoop, and on websites in which we frequently publish a small sample of our content including Seeking Alpha, Valuentum was repeatedly blasted and “attacked” for its unique and differentiated view. Many of our members were appalled by the public (and anonymous) commenters because our members have been aware of our fair value estimate on Kinder Morgan since
The Walking Dead?
August 14, 2015
At 453.6 million barrels, U.S. crude oil inventories remain near levels not seen for this time of year in at least the last 80 years. – Summary of Weekly Petroleum Data for the Week Ending August 7, 2015 The oil & gas energy complex is nearing a state of panic, if it isn’t already in one. We’ve been talking about the glut of energy resource supply for many months now, and our impeccable positioning in the newsletter portfolios long before the collapse in prices is well known. Kinder Morgan (KMI) had been a relative outperformer in the Dividend Growth Newsletter portfolio until we removed it at $40 per share a couple of months ago. The same had been true with
Big Pharma Earnings Continued…
August 13, 2015
Amgen (AMGN) Amgen’s second-quarter results, released July 30, were a sight to see. Total revenue advanced 4% versus the second quarter of last year thanks to strength in Enbrel (etanercept), Prolia (denosumab), Sensipar (cinacalcet), Kyprolis (carfilzomib) and XGEVA (denosumab). Adjusted operating income and adjusted earnings per share leapt 10% and 8% in the quarter thanks in part to the strong top-line performance but also solid adjusted operating margin improvement (~+2 percentage points). Free cash flow generation was also fantastic, with the firm hauling in $2.7 billion in the measure compared to $2.1 billion in the second quarter of 2014. Keys to the Quarter: Investors should keep an eye on its blockbuster Neulasta/NEUPOGEN performance, which faced sales pressure in the quarter,
Cisco Pops; Valuation, Dividend, and Chart Look Great!
August 13, 2015
Communications networking giant Cisco (CSCO) is off to the races August 13 after posting a better-than-feared quarterly earnings report for the fiscal fourth period, ending July 25. Cisco has been one of the more recent additions to both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio, with shares added just above $26 each in late November after registering a 9 on the Valuentum Buying Index. The company is now trading ~$29 per share, and its chart has never looked better, with shares breaking through a multi-month healthy downtrend. To put this idea into perspective, a strong 10% share-price pop since November coupled with a growing dividend stream is quite nice in today’s “flat” market. Cisco’s shares yield ~3%, and
