Stick to the Smoothies, Not the Stock with Jamba
January 9, 2012
Jamba (JMBA) is one of the largest smoothie and healthy fast-serve chains in the United States. However, the company, better known as Jamba Juice, could quite possibly be worthless. Though we see the company’s operations slowly improving, we don’t think the company makes a compelling investment at this time. Massive growth potential Undoubtedly, US consumers seem to be turning towards more health-conscious offerings and lifestyles, as evident from the big booms in running and yoga (NKE, LULU), as well as superior performance from healthy fast-food chains like Panera (PNRA) and Chipotle (CMG). Even McDonald’s (MCD) has stepped up to the plate with better tasting salads and brand-new smoothie offerings. We think Jamba could stand to benefit from these new trends.
Macy’s Hits Multi-Year High; Continues to Converge to Our $42 Fair Value Estimate
January 6, 2012
Please click the link below to view our 16-page equity initiation report on Macy’s (M): /20111011_1
Alcoa Cuts Smelter Capacity on Reduced Aluminum Prices
January 6, 2012
On Friday, aluminum-giant Alcoa (AA) announced that it would reduce system capacity by 12% to lower its cost structure in the wake of lower aluminum prices. We’re not surprised by the news as the firm’s third-quarter performance (click here), released in October, was among the worst reports during earnings season. Our fair value estimate remains unchanged for Alcoa. Specifically, Alcoa will curtail roughly 531,000 metric tons of global smelting capacity via permanent closure of its smelter in Alcoa, Tennessee, and two of its idled potlines in Rockdale, Texas. In additional to these closures (which account for about 291,000 metric tons), the firm will curtail an additional 240,000 metric tons in the “near future.” Aluminum prices have dropped almost 30% since
A Name for Your Radar: Collector’s Universe (CLCT)
January 4, 2012
At Valuentum, we continue to search for undervalued, technically-attractive companies with safe and growing dividend yields. We use the Valuentum Dividend Cushion as a way to determine how safe a firm’s dividend is, using forward-looking forecasts rather than backward looking metrics, and we employ our Valuentum Buying Index to pinpoint the best entry and exit points on a stock. We stumbled across Collector’s Universe (CLCT) in the past and decided to revisit the name today due to its compelling dividend yield. The stock currently trades at roughly $15 per share, with a dividend yield of nearly 9%. When you consider the relatively mediocre performance of most markets across the globe, a 9% yield seems tempting. However tempting the yield seems,
Sears Converges to Our $36 Fair Value Estimate; Shares Off Nearly 25% Today
December 27, 2011
Sears announced Tuesday that it would close between 100 and 200 stores (both of the Sears and Kmart variety) in an effort to shore up its finances as it struggles to compete with big-box retailers like Lowes (LOW), Home Depot (HD), Wal-Mart (WMT), and Target (TGT). The troubled retailer also said that comparable same-store-sales continue to fall and that its earnings for the fourth-quarter would come in at less than half of last-year’s levels. Valuentum subscribers were well aware of Sears’ overvaluation as the firm now trades in-line with our $36 fair value estimate, after falling by roughly half since we initiated coverage of the retailer in early October. Please click on the link below to view our initiation equity report on Sears Holdings (SHLD): << Our 16-page Report
Yahoo Mulls Asian Asset Swap; Risk Remains to the Downside
December 23, 2011
Yahoo (YHOO), beleaguered with poor performance from its domestic operations, is reportedly looking to shed some of its Asian assets in order to help prop up its stock in the midst of a massive price slide in the past few years (the firm had been trading north of $30 per share in 2007 and now is in the mid-teens). Though the news of an Asian-asset sale/spin-off continues to make headlines, we remain unimpressed by Yahoo’s core competitive position relative to Google (GOOG) and Facebook and think the proposed complex transaction related to its Asian assets is but a temporary, short-term cash boost and not a permanent fix to the firm’s structural problems. We are sticking with our long-term fair value
Oracle Issues Poor Fiscal Second-Quarter Results; Customers Delay Purchases
December 21, 2011
Oracle (ORCL) posted disappointing fiscal second-quarter results that sent the shares tumbling today. The news follows Red Hat’s (RHT) lower-than-expected outlook earlier this week and casts a shadow over the strength of the software space during the calendar fourth quarter and into next year. Though we will be revisiting our $38 per share fair value estimate for Oracle based on management’s poor outlook, we don’t expect a material change it. Oracle’s revenue jumped 2% as growth in software license sales and software license updates/product support revenues offset nearly a 14% decline in hardware systems products revenues, the latter caused by a transition to T4 processor-based products. The company noted that new software license revenue was impacted by “additional approvals required
Nike’s Second Quarter Results Were a Mixed Bag; Valuation Unchanged
December 21, 2011
Nike (NKE) posted fiscal second-quarter results, which, by most measures, was in line with our expectations. Top line revenue grew 18%, thanks to both slightly higher prices and impressive unit growth. North America, easily Nike’s biggest market, saw footwear soar 22% and apparel rise by 23%, both positive upside surprises, in our view. We also saw strength in China (up 35%) and Emerging Markets (up 27%). Though sales in Europe have languished over the past several quarters, Western Europe didn’t experience a large downturn. However, management stated its business isn’t a great gauge of the European consumer due to Euro 2012 and the London Olympics scheduled for the next year. We are maintaining our fair value estimate for Nike at
General Mills Posts Poor Fiscal Second-Quarter Results; Input Costs Represent Major Headwind
December 20, 2011
General Mills posted fiscal second-quarter results Tuesday that showed solid sales expansion thanks primarily to its acquisition of Yoplait but modest segment operating profit growth due to higher input costs and marketing expenses. Diluted EPS, excluding non-recurring items, came in at $0.76, reflecting no growth from the same period a year ago. We are maintaining our $38 per share fair value estimate. The firm’s net sales jumped 14% thanks to higher pricing and significant volume growth from its recent acquisition of Yoplait. Revenue in General Mills’ US retail operations during the period grew a meager 3% as demand for flour, dessert mixes, canned and frozen vegetables, and yogurt waned, though higher pricing more than offset the volume declines. International sales grew
Best Idea Visa Hits All-Time High Today, Crosses $100 Mark
December 20, 2011
Please click on the link below to access our 16-page equity report on Visa. << Our Stock Report on Visa (V) To access on long-term fundamental take on Visa, please view the ‘Related Articles’ below.
