Realty Income Is Our Favorite REIT Idea; It Reminds Us Why Every Month
November 4, 2013
They say ‘a picture is worth a thousand words,’ and the following snapshot may be worth a million. We like Realty Income (O) for the steady dividend increases and flexibility it provides income investors with a monthly (not quarterly or semi-annual) dividend payout. Image Source: Realty Income Third-quarter performance from the ‘Monthly Dividend Company,’ released Thursday, only reinforces the reasons why we hold the company in the portfolio of our Dividend Growth Newsletter. Internals during the period were fantastic — same store rents advanced 1.3% and portfolio occupancy jumped to 98.1% from 97%. The company posted adjusted funds from operations (AFFO) of $0.60 per diluted share in the quarter, comfortably above the cash dividends of $0.545 issued during the period. We also
Surveying 3Q Results at the Energy Majors
November 3, 2013
Performance was far from rosy across the majors during the calendar third quarter. BP’s (BP) performance showed a 26% fall in underlying replacement cost profit, Exxon Mobil’s (XOM) third-quarter results revealed an 18% decline in earnings, Chevron’s (CVX) quarterly earnings dropped nearly 6% during the period, and Shell’s (RDS.A; RDS.B) third-quarter profit (on a current cost of supplies basis) slid 31% from the same period a year ago. Only ConocoPhillips’ third-quarter results (COP) showed adjusted earnings expansion during the quarter (about 7%). Source: Valuentum The investment landscape in the ‘Major – Oil & Gas’ space remains mixed, in our view. We liked ConocoPhillips third-quarter results, but its hefty capital investment plan and net debt position certainly don’t speak of equity
Repeat Business Energizes Starbucks
November 3, 2013
Starbucks (SBUX) posted wonderful fourth-quarter results Thursday morning, driven largely by robust same-store sales growth. Revenue jumped 13% year-over-year to $3.8 billion, roughly in-line with consensus estimates. Earnings per share increased a whopping 37% to $0.63, easily exceeding consensus expectations. Free cash flow for the firm’s 2013 fiscal year was terrific at $1.8 billion, equal to 12% of revenue. That figure is up from $894 million in free cash flow generated in its 2012 fiscal year. Comps Drive Success Image Source: Company Filings, Valuentum As we can see from the above chart, Starbucks continues to experience wonderful same-store sales growth. Fourth quarter and full-year comp-store sales jumped 7% year-over-year. Financial analysts love using comp-store sales (or same-store sales—they have the
Visa and MasterCard Gushing with Cash
November 1, 2013
Best Ideas Newsletter portfolio holding Visa (V) and its rival MasterCard (MA) reported results for their respective calendar third quarters. Visa’s top-line continues to expand, growing 8.8% year-over-year during its fiscal year 2013 fourth quarter to $2.9 billion, a tad shy of consensus estimates on nearly $1.1 trillion in gross dollar volume. The combination of the firm inking more major deals than usual (which increased incentives) and foreign exchange effects lowered reported revenue growth by 1.5 percentage points. Visa’s net income per share jumped 20% year-over-year to $1.85, in-line with consensus estimates. For the fiscal year, earnings per share soared 23% year-over-year to $7.59. Free cash flow, adjusted for some timing issues related to the merchants opting out of the
The Curious Cases of Intuitive Surgical and Teva Pharma: What We Have Learned
November 1, 2013
Within every portfolio, there will be a couple companies that do not live up to immediate expectations. Two such companies in our Best Ideas portfolio that haven’t yet delivered on our theses are Intuitive Surgical (ISRG) and Teva Pharma (TEVA). We hold the Healthcare Select SPDR ETF (XLV) in the Best Ideas portfolio as well (it has been a top performer) and our healthcare picks—Johnson & Johnson (JNJ) and Medtronic (MDT)—have performed wonderfully in our Dividend Growth portfolio, but we’re still waiting for our theses to be confirmed with respect to Intuitive Surgical and Teva Pharma. Before we go any further, however, we think it is important to reiterate that the size of the weighting of a position in our
No Disappointments in “Waste Land”
November 1, 2013
Waste Management and Republic Services operate in an industry known for its attractive structural characteristics.
Third-Quarter Results Strengthen Our Confidence in Facebook
October 31, 2013
Best Ideas Newsletter portfolio option position Facebook (FB) once again flexed its advertising muscle when it reported fantastic third-quarter results Wednesday. Revenue swelled 60% year-over-year to $2 billion, soaring past consensus estimates, while non-GAAP earnings per share rose 108% year-over-year to $0.25, also above consensus estimates. Year-to-date, free cash flow is phenomenal at $2.1 billion, equal to 40% of total revenue. The Words that Clouded the Quarter “Our best synopsis on youth engagement in the U.S. reveals that usage of Facebook among U.S. teens overall was stable from Q2 to Q3. So we did see a decrease in daily users specifically among younger teens.” – CFO David Ebersman In spite of overwhelmingly positive financial results and a few
LinkedIn’s Growth Doesn’t Disappoint But Its Valuation Is Absurd
October 31, 2013
Professional social networking giant LinkedIn (LNKD) posted another strong quarter Tuesday night after the market close. Revenue exceeded consensus estimates as it soared 56% year-over-year to $393 million. The bottom line followed suit, as non-GAAP earnings per share jumped 77% year-over-year to $0.39. LinkedIn also revealed decent free cash flow, which stands at $133 million year-to-date, equal to 12% of total revenue. However, Mr. Market was none too pleased with LinkedIn’s guidance, but we’ll get into that later. Engagement Remains Strong Image Source: LNKD 3Q13 Slides Though down slightly sequentially, LinkedIn continues to take steps with respect to engagement. According to comScore (shown above), LinkedIn had 142 million unique visitors during its third quarter, an increase of 29% on a year-over-year
The Valuentum Dividend Cushion Predicts CONSOL’s Dividend Cut
October 31, 2013
Coal and natural gas firm CONSOL (CNX) became the latest company whose dividend cut Monday had been successfully predicted by the Valuentum Dividend Cushion. With a Valuentum Dividend Cushion score of -3.5 before the board’s decision to conserve cash and slash the payout, it appeared to us that the move was inevitable (a measure below 1 is suspicious, while a measure that is negative is highly concerning). Out of our 1,000+ company coverage universe, CONSOL’s dividend was assessed by us to be among the 10 weakest. We make available the most-visited ‘Dividend Yields to Avoid’ article on the left column of our home page under ‘Stock Screens,’ and we update the list of firms that receive the dubious honor periodically.
Looking for Alpha? It’s In Our Best Ideas Newsletter
October 30, 2013
Best Ideas portfolio holdings Buffalo Wild Wings (BWLD) and Baidu (BIDU) reported fantastic third-quarter results after the close yesterday, sending both of their shares higher in Wednesday trading! Buffalo Wild Wings closed at $141.22 per share, up over 9% on the trading session, while Baidu closed at $164.93 per share, up nearly 3.5% for the day. Baidu was added to our Best Ideas portfolio August 1, 2013 at $133.60 per share (click here for Best Ideas portfolio transaction log). If you didn’t receive that email, contact us immediately at info@valuentum.com. A 23% gain in just a couple months isn’t too bad, and we’re expecting further upside to shares. Buffalo Wild Wings has been a holding in our Best Ideas portfolio
