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
Hewlett-Packard Still Not Our Favorite Tech Idea
May 22, 2015
Image Source: wlodi On May 21, Hewlett-Packard (HPQ) reported its 2015 second-quarter earnings, which included an update on its turnaround plan and upcoming separation. As you may be aware, HP has had a difficult time combatting secular demand declines and macroeconomic headwinds in recent years, and its near-term outlook remains weak. Though it scores exceptionally well on our Valuentum dividend metrics, the firm’s turnaround plan will likely affect its dividend negatively. Overall revenue is expected to continue to decline in coming periods, but management has high hopes for the effectiveness of the separation of HP into two Fortune 50 companies. Reported revenue for the quarter was a slight miss at ~$25.5 billion, a decline of 7% on a reported basis
Target or Walmart?
May 21, 2015
Image Source: Steven Depolo It’s not the roaring 1990s anymore, investors! There are serious risks to the business models of Target (TGT) and Walmart (WMT), and everyone is looking the other way, consoling themselves with their steady and growing stream of dividends. These investors say, “as long as they pay the dividend, I don’t care,” as if this signals a proud achievement in some way, by which many experienced market participants will then respond, “and now we know why the individual investor is frequently blindsided.” The dividend is a symptom of the health of free cash flow, and management teams can dip into the balance sheet to support the payout. Only trends in free cash flow generation, supported by moaty
The Tax Man Cometh Anyway?
May 20, 2015
Image Description/Source: Berlin Wall, 1963; Roger We ran a video in late January about the concerns we had with Yahoo’s (YHOO) fair value uncertainty, and it turns out they weren’t unfounded (see video). One of our biggest issues surrounding the company was the potential tax ramifications of the spinoff of Alibaba shares (BABA) and whether ultimately the tax bill would land on shareholders’ laps. It turns out that it just might. Bloomberg reported May 19 that the IRS is considering a rule change that would “affect IRS rules for spinoffs by creating new US guidelines that might require a minimum size for active businesses inside the spun-off company.” As it stands right now, Yahoo’s spin-off is just an investment entity with no
