E-commerce Remains in Secular Expansion
March 14, 2014
Thursday brought a plethora of news from the e-commerce space. First, Bloomberg reported that Amazon (AMZN) is raising prices on Prime from $79 per year to $99 per year. The company was quick to note that the Prime Fresh membership fee will remain unchanged at $299, as it continues to test pricing thresholds in the marketplace. We don’t expect much customer defection as a result of the price hike—and especially nothing like that which happened to Netflix (NFLX), which lost hundreds of thousands of customers when it raised prices in 2011. Amazon’s price increase at Prime was necessary, in our view, as it faces rising content (movies) and shipping costs. With more than 20 million US Prime members, the pricing
The Markets Go Down…Sometimes
March 14, 2014
By Brian Nelson, CFA To me, daily stock market commentary doesn’t make a lot of sense. We all know that the stock market is going to go up on certain days and go down on certain days. This isn’t newsworthy, per se. I think the real news would be if the market did not change during the trading session at all. Then something would be terribly wrong. I believe that accepting the inevitable concept of daily volatility allows one to accept big down days like what happened today (see chart to right) as simple normal occurrences in the market. What I try to do as head of equity research at Valuentum is to position our members with the knowledge to
General Electric Is in the Bargain Bin; CEO Jeff Immelt Agrees
March 13, 2014
General Electric (GE) has been in the news quite a bit as of late. The industrial and finance conglomerate reported fantastic fourth-quarter results January 17 that revealed significant order and backlog expansion (two indicators of future financial performance). The fundamental momentum the company has shown recently with respect to its industrial operations is undeniable. The company is also making the right moves with its financial operations. Having suffered through a dividend cut during the financial crisis, GE is now wisely seeking to shed (in an initial public offering) the reason why it was forced to slash its dividend payout years ago, its consumer financial services company (to be named Synchrony Financial). Synchrony isn’t all of GECC–GE currently owns 100% of
Dollar General’s Outlook A Little Light; Could Consolidation Be Brewing in the Dollar Store Space?
March 13, 2014
The retail discount store industry (or the dollar-store industry) provides consumable basic needs to customers primarily in the low- and middle-income brackets. More than one third of the industry’s customers live in households that earn less than $20,000 per year, making the group’s results counter-cyclical–as more households generate lower income due to poor economic conditions, store growth and same-store-sales opportunities increase. Still, competition is fierce among constituents and with many other retailers, including grocery stores. But given the niche low-price strategy of participants and their counter-cyclical nature, we tend to like the group. Dollar General (DG) has been operating at a level higher than that of its dollar-store peers, but its outlook for fiscal year 2014, released in its fourth
Dividend Increases/Decreases for the Week Ending March 7
March 7, 2014
Below we provide a list of firms that raised/lowered their dividends during the week ending March 7. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports, please click here (or use our ‘Symbol’ search box in our website header). Firms Raising Their Dividends This Week Agree Realty (ADC): now $0.43 per share quarterly dividend, was $0.41. Altisource Residential Corp (RESI): now $0.40 per share quarterly dividend, was $0.25. Avago Technologies (AVGO): now $0.27 per share quarterly dividend, was $0.25. The Children’s Place (PLCE): now $0.1325 per share quarterly dividend (first ever). Devon Energy (DVN): now $0.24 per share quarterly dividend, was $0.22. Family Dollar Stores (FDO): now
Big Tobacco, Brewers Want to Continue Consolidation; Altria to Benefit
March 3, 2014
Altria (MO) is a holding in both the portfolio of the Best Ideas Newsletter and the portfolio of the Dividend Growth Newsletter. The company operates in one of the strongest industries in our coverage universe as it relates to structural composition (think Porter’s 5 forces). The oligopolistic tobacco industry is attractive in a number of ways. Firms in the industry sell an “addictive” product (cigarettes and/or smokeless tobacco), have significant pricing power, generate high margins, and have strong returns on invested capital. Though declining trends in smoking in the US, threats of tobacco-related litigation, new tobacco regulation (labeling) that discourages tobacco use, and excise tax price shocks that may impact demand will always be concerns, we tend to like the structural
Buffett’s 2013 Annual Letter to Shareholders
March 3, 2014
Warren Buffett does a fantastic job communicating the concept of staying humble in his annual letter to shareholders of his firm Berkshire Hathaway (BRK.A, BRK.B). Some may not believe that the Oracle of Omaha—arguably one of the best investors in history—has underperformed the market in 10 of the past 49 years, but it is true. In Nelson’s ‘The 13 Most Important Steps to Understand the Stock Market,’ he talks about the importance of setting expectations about the market and your portfolio appropriately. Having the right perspective could save you from a lot of portfolio churn as well as a lot of misplaced disappointment. Here’s the excerpt from Nelson’s ‘13 Steps’ (source): You Will Be Wrong. Individual investors sometimes think that every
Valuentum’s March Edition of Its Dividend Growth Newsletter!
March 2, 2014
Stay Alert! But Participate. by Brian Nelson, CFA The markets set a new high…again. We like that the Dividend Growth portfolio continues to perform fantastically, but we also think that prudence and caution are still in order. The past 14 months have simply been incredible for equity holders (please see the performance of the S&P 500 in the graph below). Last month, we outlined how the broad market indices are overvalued on the basis of historical forward price-to-earnings measures, especially after factoring in the current pace of expansion and how far we are into the ongoing economic recovery. We’re not making any abrupt changes to the Dividend Growth portfolio at this juncture, but we think staying alert is always a
Thank you…
February 28, 2014
By Brian Nelson, CFA Earlier this week, I received an email from a colleague and valued member of our services. I wanted to share it here for others to read. I haven’t included his name, but if he wants me to, I can add it in. It is filled with wisdom, experience and kindness. And it really made my year to read his words. The Valuentum community, I believe, is the best community of investors out there. Sir, if you do happen to read your own email on our site, we very much have appreciated your feedback, and we hope to continue to live up to your praises. We are dedicated, and our team has been rejuvenated by your words.
