Salesforce Doesn’t Make the Cut for the Newsletter Portfolios
December 25, 2022
Image: How we rank our favorite ideas. We’re huge fans of ideas in the simulated newsletter portfolios and Exclusive publication. We like the ideas in the simulated newsletter portfolios and Exclusive publication the best. By Brian Nelson, CFA Salesforce, Inc. (CRM) has never been an idea in the simulated newsletter portfolios since inception, and that’s not going to change anytime soon. Its share price has been roughly cut in half in 2022, and we’re sticking with our $130-$196 per share fair value estimate range following the company’s disappointing outlook for the fourth quarter of fiscal 2023. Weakness across the software space and the exit of co-CEO Bret Taylor and Stewart Butterfield, the head of Salesforce-owned Slack, aren’t reassuring. Risks are
Raising Our Fair Value Estimate of Dividend Aristocrat Caterpillar
December 24, 2022
Image: Caterpillar’s financial momentum is impressive. Image Source: Caterpillar By Brian Nelson, CFA We’ve raised our fair value estimate of Caterpillar Inc. (CAT) to $238 per share from $192 previously. As witnessed in Deere & Company’s (DE) fiscal fourth-quarter results, too, Caterpillar is driving considerable pricing expansion across its portfolio, and the impact on its financials has been quite impressive. Though not an idea in any newsletter portfolio, Caterpillar’s shares yield ~2% at the time of this writing, slightly better than the average S&P 500 company. The company is proud to be a Dividend Aristocrat. When Caterpillar reported third-quarter 2022 results back in October, the company recorded a 21% increase in revenue while adjusted profit per share leapt to $3.95
FedEx’s Revenue Falls, Operating Income Tumbles in Fiscal Second Quarter
December 23, 2022
Image: FedEx’s revenue faced significant pressure during its second quarter of fiscal 2023. Image Source: FedEx By Brian Nelson, CFA On December 20, FedEx Corp (FDX) didn’t deliver what investors wanted when it issued its fiscal second-quarter results for its fiscal 2023. Though the firm’s non-GAAP earnings per share came in slightly better than the consensus forecast, the company’s top line missed by a large margin, declining ~3% on a year-over-year basis. We recently lowered our fair value estimate of FedEx to $214 per share from $293 per share, but even this reduced estimate may be a bit too bright given our growing concerns over its fiscal 2025 targets. We continue to be cautious on shares of FedEx in light
Dividend Increases/Decreases for the Week of December 23
December 23, 2022
Below we provide a list of firms that raised their dividends during the week ending December 23. 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 AMCON Distributing (DIT): now $5.00 per share special dividend, was $0.18. ATN International (ATNI): now $0.21 per share quarterly dividend, was $0.17. Autoscope Technologies (AATC): now $0.13 per share quarterly dividend, was $0.12. Bird Construction (BIRDF): now CAD 0.0358 per share dividend, was CAD 0.0325. Builders Capital Mortgage (BCF:CA): now $0.2016 per share quarterly dividend. Cadiz 8.875% DEP PFD A (CDZIP): now $0.56 per share
Be Careful With Celebrity Endorsement of Investment Products
December 22, 2022
Dear members: — Have you ever wondered why so many trust the TV for financial advice or stock tips? — You guessed it: It comes back to “brain science” or the concept of familiarity. When we see a celebrity or our favorite stock guru on the television, it arouses our emotions and connects us with the idea, making the experience more memorable. The brain tends to treat our favorite newscaster or celebrity as a trusted, familiar friend, and therefore we translate those feelings into expertise and a “valid” endorsement. — As humans, we can sometimes be misled. Recently, Kim Kardashian had to pay $1.26 million to settle an SEC charge that she promoted a cryptocurrency while failing to disclose she
Nike’s Weak Earnings Growth, Markdowns, and Lofty Inventory Levels Still Telling of a Struggling Consumer
December 21, 2022
Image Source: Valuentum By Brian Nelson, CFA The health of the consumer continues to be one of the biggest questions heading into 2023. Many consumers are working through the excess savings garnered via COVID-19 stimulus (and many market observers expect this savings to run out by mid-2023) and credit card debt is on the rise. Inflation is taking a bite out of consumer discretionary spending as more and more of consumer financial capacity is being allocated to necessities including food and grocery items. Food at home costs have soared, and many have had to cut back in other areas. Nike’s (NKE) second-quarter fiscal 2023 results, released December 20, showed a very discerning consumer that is looking to drive a
Our Reports on the Real Estate Investment Trusts (REITs)
December 21, 2022
Dividend Yield: Estimated on a forward-looking annualized basis. VBI: The Valuentum Buying Index, a timeliness indicator that overlays a price-to-fair-value estimate consideration. Fair Value Estimate: Derived by Valuentum’s enterprise valuation process. Dividend Cushion ratio: A ratio assessing the health of the dividend (the higher, the better). Data as of the date of this article. Individual company reports may have been updated subsequent to the publishing of this article, so please download a company’s stock and dividend report for its latest information and data. Note: The data in the tables of each of the below companies’ respective stock pages is updated the weekend after the publishing of this update. Please click on a company name below to view the corresponding equity
Stock Market Locked in Technical Downtrend; Millionaires Expect More Pain in 2023
December 20, 2022
Image: The stock market has been locked in a downtrend through all of 2022, and the latest bull trap has spoiled the Santa Claus rally. 2023 may be an equally rough year. By Brian Nelson, CFA This market just doesn’t want to go higher in the near term, and the latest bull trap wasn’t encouraging at all. We think long term investors should stay the course, but it is looking more and more like we won’t see a stock market bottom until sometime in 2023. Santa brought coal this year. The false breakout of the downtrend on December 13 was very telling. Just when investors thought the markets just might be headed for a strong Santa Claus rally and a
Waste Management’s Free Cash Flow Facing Pressure from Sustainability Initiatives
December 16, 2022
Image Source: Valuentum By Brian Nelson, CFA We’re huge fans of the environmental services industry. Solid waste simply must be disposed of somewhere in good times or bad times, and garbage haulers operate within an attractive oligopoly when it comes to disposal capacity (i.e. transfer stations, disposal facilities). Many players offer attractive dividend yields to boot. We include Republic Services (RSG) as an idea in our simulated newsletter portfolios, but Waste Management (WM) is yet another consideration. On December 8, Waste Management announced that its board gave the thumbs up for a 7.7% increase in its quarterly payout for 2023, to $0.70 per share. The hike to $2.80 per share on an annual basis implies a forward estimated dividend yield
Union Pacific Outperforming North American Rail Traffic Trends But Facing Inefficiencies and Inflation Hurdles
December 14, 2022
Image Source: Chuckcars By Brian Nelson, CFA On November 30, the Association of American Railroads reported that North American rail traffic is down 1.9% on a year-to-date basis through November 26. Carloads of chemicals, coal, motor vehicles and parts, nonmetallic minerals, and petroleum products were strong, but weakness in farm products, forest products, grain, and metallic ores and metals weighed on overall strength. Rail remains among the most economical way to ship goods over long distances. The railroads were front and center in the news recently about a potential work stoppage over the issue of paid sick leave. President Joe Biden, however, was able to put an end to the potential for a strike by signing “into law a joint
