Apple and Intel Soar
July 16, 2014
By Brian Nelson, CFA We generally don’t like commenting on pricing performance because it immediately becomes stale, but… …when was the last time you saw Intel (INTC) up 7% on the trading session?!?! I know I can’t remember, but that’s what happens to Valuentum stocks! Intel’s stock has surged from $24 and change in March to more than $34 per share today on the heels of a strong second-quarter report and outlook (1)…this is a big move for a ~$170 billion market-cap company that pays a nice ~3% dividend yield! …and now that we’ve let our emotions show. How can we forget about Apple (AAPL)?!?! The iPhone maker is approaching $100 per share, the split-adjusted equivalent of $700 following its
Johnson & Johnson: Beat and Raise
July 16, 2014
Johnson & Johnson (JNJ) has built one of the most comprehensive health care businesses, generating approximately 70% of revenue from top positions in its respective markets. The firm is focused on innovation while broadening its geographic presence, and it benefits from one of the best pharmaceutical portfolios on the market today. All of this was on display when J&J reported better than-expected second-quarter results Tuesday. Sales during the period advanced more than 9% thanks to a near-15% increase in domestic revenue. Excluding one-time items, net earnings for the quarter came in at $4.8 billion, equivalent to $1.66 per share – up 11.3% and 12.2% respectively, as compared to the same period in 2013. Leading the charge was the company’s pharmaceutical
Valuentum’s July Edition of Its Best Ideas Newsletter!
July 16, 2014
The Writing Is on the Wall, by Brian Nelson, CFA “The stock market is a no-called-strike game. You don’t have to swing at everything—you can wait for your pitch. The problem when you’re a money manager is that your fans keep yelling, ‘Swing, you bum!’” – Warren Buffett, 1999 If there is an environment more difficult to hit a pitch out of the park, I don’t think I’ve seen one. Valuations have been shooting to the upside for some time, making it difficult for investors to hit that proverbial home run. The market is climbing a wall of worry—and now, the wall has writing on it. Janet Yellen at the Fed had something to say about valuations in its Monetary Policy
Beer and Cigarettes
July 14, 2014
Update: Shortly after the publishing of the following article, Reynolds American announced that it would acquire Lorillard in a deal valued at $27.4 billion, or a deal price of $68.88 per share (in-line with the high end of our fair value estimate range for Lorillard, as predicted). For more details >> ————— Let’s pick up right where we left off. On May 22, we commented that Reynolds American (RAI) and Lorillard (LO) have been looking to combine operations. Here’s what we wrote at that time: According to recent reports, tobacco giants Reynolds American and Lorillard continue to work to tie the knot. The speculated deal is rumored to be a three-way transaction that involves Reynolds’ shareholder British American Tobacco (BTI),
Dividend Increases for the Week Ending July 11\t
July 13, 2014
Below we provide a list of firms that raised their dividends during the week ending July 11. 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 Computer Services (CSVI): now $0.22 per share quarterly dividend, was $0.16. ConocoPhillips (COP): now $0.73 per share quarterly dividend, was $0.69. Highway Holdings Limited (HIHO): now $0.05 per share quarterly dividend, was $0.04. Home Federal Bancorp (HFBL): now declares $0.07 per share quarterly dividend, was $0.06. Paychex (PAYX): now $0.38 per share quarterly dividend, was $0.35. Ryder System (R): now $0.37 per share quarterly dividend, was
eBay is One of the Cheapest Stocks on the Market
July 12, 2014
A data breach and a Google (GOOG) search algorithm change were key concerns heading into June for eBay (EBAY), but the firm’s same-store sales pace during the month showed that little could stop the fundamental momentum at the online retailing giant. Though the pace of its same-store sales expansion may never reach the breakneck rate of Amazon (AMZN), we prefer eBay’s profit focus and believe its competitive advantages are as strong as–or even stronger than–Amazon’s. Here is the June same-store sales data from ChannelAdvisor (ECOM): Amazon – Amazon’s June SSS came in at 34.4%, an increase compared to May’s 28.1%. The Amazon Fire Phone was announced in June and could have caused some knock-on effects. eBay – eBay’s June came
There’s No Space Like Aerospace
July 11, 2014
The recovery from the stock-market bottom in March 2009 has been five years in the making, but as the cyclical threat of an eventual global downturn looms, the aerospace industry is one of the few industries that we think will continue to be resilient in the face of such pressures. We expect commercial aircraft build rates to continue to climb at least through 2018. If the multi-year backlogs of unfulfilled deliveries at the large airframe makers aren’t enough, Boeing’s (BA) updated 20-year outlook for commercial aerospace demand, released June 10, was about as rosy as can be. The reason for such a long-range view has to do with the nature of aircraft building. When airframe makers build next-generation aircraft, they
Ford’s China Sales Continue to Impress
July 9, 2014
June proved to be another great month for Best Ideas portfolio holding Ford (F) in China (1). First-half sales numbers, released Monday, increased to nearly 550,000 wholesale vehicles compared to just over 400,000 in the first half of 2013. Ford’s June sales alone increased 17%, to 87,783. The news showcases Ford’s continued sales momentum in the country, something we’ve been monitoring closely for some time. The Ford Focus, Ford Kuga, Ford Mondeo and the Ford EcoSport have been key sources of strength, with the Focus becoming a huge hit with consumers in the country. A latecomer to China, Ford may be trailing early-movers such as GM (GM) and Volkswagen (VLKAY), but the automaker’s rate of sales growth continues to significantly
Dividend Increases for the Week Ending July 4
July 7, 2014
Let’s take a look at dividend increases for the week ending July 4.
Utilities Are Safe Income Vehicles…Most of the Time
June 30, 2014
Many dividend growth investors have capital invested in steady-eddy utilities firms, and there is nothing wrong with that. In fact, we also have exposure to the Utilities Select SPDR ETF (XLU) in the Best Ideas portfolio and to PPL (PPL) in the Dividend Growth portfolio. Though the regulated ‘returns’ and steady performance of utility-entities are quite attractive, especially when they pay annual dividend yields of 3%-4% per annum or more, we think it is very important for investors of all types to understand that the dividends of utilities are not without risks. In fact, the nature of their capital structure sometimes exposes utilities to more risks than other entities, especially with respect to the dividend. Before we get started, it’s
