Netflix Crushed, Walmart’s Outlook Disappoints
October 16, 2014
One of the most overvalued stocks on the market, Netflix (NFLX), issued third-quarter results Wednesday that sent shares tumbling. The company’s quarterly report wasn’t bad; the firm’s top line was in-line with expectations, and the firm’s bottom line beat consensus. However, the market wanted more. Market prognosticators were looking for the company in the third quarter to add ~3.6 million subscribers, which matched the company’s guidance. Netflix added only 3.01 million–not a bad mark, but disappointing relative to expectations. Remember: value is based on future projections of free cash flow, and what was embedded in Netflix’s stock price before the report needs now to be adjusted downward; hence the decline in shares. Even after the fall in price, however, you
Johnson & Johnson: Still a Solid Dividend Growth Pick
October 15, 2014
Yesterday, a core holding in the Dividend Growth portfolio, Johnson & Johnson (JNJ), reported fantastic third-quarter results. Sales of $18.5 billion advanced more than 5% compared to the third quarter of 2013. Domestic sales leapt 11.6%, while international sales were roughly flat, off less than 1%. The results were muddied by the divestiture of its Ortho-Clinical Diagnostics business. Worldwide, domestic and international operational sales growth, adjusted for the divestiture, came in at 8.4%, 14.8% and 3.1%, respectively. Net earnings, excluding special items, were $4.3 billion and $1.50 per share in the quarter, up 9.5% and 10.3% on a year-over-year basis, respectively. These are fantastic growth rates for a company of Johnson & Johnson’s size. The biggest driver behind the company’s
Intel Still Resilient Despite “Peer Pressure”
October 15, 2014
As we hinted on the day of Microchip’s (MCHP) warning, we thought Intel (INTC) may be a standout in the chip space, and the company didn’t disappoint. The company’s third-quarter results beat estimates on both the top and bottom lines, and management issued solid guidance. Intel is included in both the Best Ideas portfolio and Dividend Growth portfolio. The headlines were impressive. Intel’s third-quarter revenue of $14.6 billion advanced 8% on a year-over-year basis thanks in part to record quarterly unit shipments of PCs, servers, tablets, phones and Internet of Things. It was its best-ever third-quarter revenue performance. The firm also noted that the quarter marked the first time that it shipped more than 100 million microprocessors in a quarter. Equally
The Correction: Surveying the Marketplace in 3 Charts
October 14, 2014
For those just joining us, we’ve been profiling the market’s recent slide under the article series titled, The Correction. This article is the latest installment of the series. SPDR Select S&P 500 (SPY) Breaks Below 200-day Moving Average You can say what you want about technical analysis, but times have changed since strict fundamentalists started publishing that chart reading is taboo. There are industry veterans who grew up with the markets decades ago that still don’t buy into the discipline, but technical analysis has become a much-needed skill at any level. Why? Well, the more technicians and chart-followers there are, the more the markets behave according to that particular discipline. Remember: stock prices are driven by buying and selling of
The Correction: No Panic Selling on Columbus Day
October 13, 2014
The past three years have been an anomaly, in our view, with the broader equity markets practically going straight up. For those new to the markets and stock investing, in general, this simply is not how the equity markets behave. Many stock pickers have even become frustrated as a result of the market’s steady-eddy advance with negligible meaningful swings during most of the past 36 months. The market, as measured by the SPDR S&P 500 (SPY), hasn’t had a 10% drop in nearly 1,100 days. As of last Friday’s close, we’re a mere 5.6% from the intra-day high on September 19. During the past three years, the market has made everyone look like a genius, and frankly it has been
Performance of the Valuentum Buying Index
October 13, 2014
Note: A more recent analysis of the Valuentum Buying Index rating system can be accessed at the following link: /Value_and_Momentum_Within_Stocks_Too Two separate studies have reinforced the efficacy of the Valuentum Buying Index, both as a portfolio optimization tool and as an idea generator. If you cannot view the video, please consult the transcript that follows. To view Valuentum’s updated YouTube page, please see here. The studies referred to in this video can be accessed as follows: Why Valuentum Buying Index Ratings Matter: /20141003_1 Valuentum’s Performance on Seeking Alpha: /20141009 Please be sure to read the studies closely in addition to watching the video or consulting the transcript below. Brian Nelson, CFA: This is Brian Nelson from Valuentum Securities. I’d like to talk
Dividend Increases for the Week Ending October 10
October 13, 2014
Below we provide a list of firms that raised their dividends during the week ending October 10. 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 Ameren (AEE): now $0.41 per share quarterly dividend, was $0.40. Kraft Foods Group (KRFT): now $0.55 per share quarterly dividend, was $0.525. Pall (PLL): now $0.305 per share quarterly dividend, was $0.275. PolyOne (POL): now $0.10 per share quarterly dividend, was $0.08. RPM International (RPM): now $0.26 per share quarterly dividend, was $0.24. >>Last week’s dividend increases.
The Correction: Draghi; Chip, Telecom Warnings; Oil and MLPs
October 10, 2014
The equity markets have been under significant pressure the past few weeks, and we think there is further downside to come. Our view is that the equity markets will be lower than today’s levels within the next 6-18 months, if not tomorrow or next week or next month. We’ve taken profits on cyclicals, and we’ve already closed out the put option hedges in both portfolios for a substantial gain (the latest transaction alert email can be accessed here). Europe appears to be in a giant mess again. The region hadn’t been strong by any stretch of the imagination, but we recently picked up material weakness during Ford’s (F) recent analyst day, which in part prompted us to take a very
Transaction Alert: Closing Put Option Contracts
October 10, 2014
With options, time and volatility can work against you, even if you are directionally right. We’re done playing with ‘fire,’ and we’re taking profits on the put option contracts. We may reinstate the positions at a later date as our cautious outlook remains unchanged.
The Correction: The Markets Took a Turn for the Worse Thursday
October 9, 2014
Strong reports from Alcoa and Pepsi could not buoy the markets. We might get another big leg down soon. Pay attention.
