No Value Lost in PPL Spinoff
June 3, 2015
Dividend Growth Newsletter portfolio holding PPL Corp’s (PPL) shares were adjusted lower earlier this week, as the firm officially completed the spinoff of its energy supply business June 1. The move completes PPL’s transition to a focus on regulated utilities in the US and UK. PPL’s spinoff, now trading under the name Talen Energy Corporation (TLN), also includes the addition of RJS Power of Riverstone Holdings. As previously announced, all of the common stock of Talen Energy will be distributed pro rata to PPL shareholders. PPL shareholders received ~.1249 shares of Talen Energy common stock for each share of PPL owned as of May 20. Fractional shares were not issued; instead they were aggregated and sold in the open market,
Medtronic On Track with Covidien Integration
June 2, 2015
Image Source: U.S. Embassy Kyiv Ukraine Today, June 2, Dividend Growth Newsletter portfolio holding Medtronic (MDT) reported its first results including business from recently-acquired Covidien. The acquisition was successfully closed on January 26, early in the fourth quarter of the firm’s fiscal year 2015, and was worth nearly $50 billion. In its report, management presented results in a couple ways, one on a strictly-reported basis and the other on a constant-currency, comparable basis. The latter includes Covidien’s prior-year monthly results aligned to Medtronic’s fiscal quarters, which the company feels gives a more accurate picture of underlying performance and the success of the early stages of integration of Covidien. The strictly-reported basis, on the other hand, provides a better understanding of the
The US Economy Is Shrinking
June 1, 2015
“The way you lose money in the stock market is to start off with an economic picture. I also spend fifteen minutes a year on where the stock market is going.” and “If you spend more than 13 minutes analyzing economic and market forecasts, you’ve wasted 10 minutes.” – Peter Lynch I’m not so much a Peter Lynch disciple as I am a logical thinker. According to the legendary fund manager, you have a total of three minutes to read this piece on broader economic activity, and then move on to more useful analysis. There’s no time to waste! Peter Lynch was the manager of the Magellan Fund at Fidelity Investments through the late 1970s and during the 1980s, where
Dividend Increases for the Week Ending May 29
June 1, 2015
Below we provide a list of firms that raised their dividends during the week ending May 29. 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 Bank of Montreal (BMO): now C$0.82 per share quarterly dividend, was C$0.80. Canadian Imperial Bank (CM): now C$1.09 per share quarterly dividend, was C$1.06. Donaldson (DCI): now $0.17 per share quarterly dividend, was $0.165. El Paso Electric (EE): now $0.295 per share quarterly dividend, was $0.28. Extra Space Storage (EXR): now $0.59 per share quarterly dividend, was $0.47. Hewlett-Packard (HPQ): now $0.176 per share quarterly dividend,
Are Corporate Credit Ratings Really Useful?
May 30, 2015
Image Source: Simon Cunningham There is no way… hold on, let me start over. There is absolutely no way that a company whose primary product price can fall 50% or more in a couple months is a pristine AAA-rated credit. It makes little sense. Having evaluated the credits of hundreds of companies spanning all sectors and industries, you’re never going to convince me that such a business model is worthy of a coveted AAA credit rating. Never. This week, Standard & Poor’s (MHFI) reiterated Exxon Mobil’s (XOM) AAA rating, as if the conditions that shellacked the energy markets the past 6 months simply do not apply to Exxon. Instead, the rating agency opted to lower the firm’s liquidity rating from
Is The Time Ripe to Pick Up Kors?
May 28, 2015
You just can’t buy cheap stocks, and hope and pray things will work out. You know this! Not you personally — you know, the universal you. The fundamental framework of the Valuentum Buying Index protects you from falling knives. It requires stocks to be both underpriced and “going up” before we would consider them. Yes, we can talk castles, moats, dividends, and anything else you’d like. But the VBI is the essence of our teachings. It’s the culmination of all research and analysis. We’re not kidding. Name it. It’s in there. The best stocks will be ones that are underpriced on a whole variety of different metrics and are also experiencing buying action or accumulation, as revealed by an upward
Question Answered
May 28, 2015
Let’s start with the answer first… Answer: Thanks for reaching out. You are correct. The Convergys (CVG) PDF report was updated after the Valuentum Buying Index screen was published (the screen that is on the left column of our home page). The next update of the Valuentum Buying Index screen will include the updated information. The latest article that mentions Convergys, which you reference, explains that there has been a change to the rating since the last screen. The dates are very important, and the most recent information will always be found in the individual PDF reports. We don’t have a hard-and-fast rule for the big middle of Valuentum Buying Index ratings (3-8), which we generally view as “we’d consider holding”
Long-time 9-Rated Broadcom Soars!
May 27, 2015
The Valuentum Buying Index is a system that is designed to generate new ideas. Firms that register a 9 or 10 on the ranking system are ones that our team digs into to decide whether they pass muster for inclusion into the newsletter portfolios. Not all 9’s and 10’s make the cut, but that doesn’t mean they are poor ideas. Once an idea registers a high rating and is added to the newsletter portfolios, it is held until it registers a low rating — thereby, capturing the pricing cycle from undervalued and “going up” to overvalued and “going down.” The newsletter portfolios are performing great, and so are some of the recent highly-rated companies! Convergys (CVG) was a company that
Market Is Catching On To Alibaba
May 27, 2015
Since Alibaba’s (BABA) IPO in September 2014, we have been adamant about the long-term potential of Chinese e-commerce giant Alibaba. Our fair value estimate of its share price currently sits at $134. Though we expect price-to-fair convergence to happen eventually, it will take some time. Despite currency and country-specific risk concerns, as well as the recent development of potential tax ramifications of Yahoo!’s (YHOO) spinoff of Alibaba shares and whether ultimately the tax bill would land on shareholders’ laps, the company is currently undervalued, and the firm has just started to turn heads regarding the improvement in its monetization rate. To us, it will always be more important that a company is undervalued than where it generates its business. Currency
A Tale of Two Companies: Duality in the Valuentum Buying Index
May 26, 2015
We’re not much for pumping our own chest, and it’s never a good idea to argue by example, but when certain situations help prove our investment beliefs, we take notice. In this piece, let’s take a look at two firms that have been at opposite ends of our Valuentum Buying Index. At the high end of the scale we have American International Group (AIG). The firm has been rated a 9 on the VBI scale–which rates companies on a scale of 1-10–for years now. Our low-end example will be Lumber Liquidators (LL). While the firm’s poor rating may seem like an obvious call, the importance of our rating is based on timing, which will be expanded upon shortly. Let’s take
