Valuentum Exclusive Analysis for the Discerning Investor

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Summary

Best Ideas Newsletter portfolio

Pepsi (PEP): 4%-6% à 0%

McDonald’s (MCD): 4%-6% à 0%

Amazon (AMZN): 0% à 4%-6%

Nvidia (NVDA): 0% à 4%-6%

Dividend Growth Newsletter portfolio

Honeywell (HON): 3%-4% à 0%

McDonald’s (MCD): 3%-4% à 0%

Meta Platforms (META): 0% à 3%-4%

Booking Holdings (BKNG): 0% à 3%-4%

By Brian Nelson, CFA

2024 proved to be a great year for stock investors. The Dow Jones Industrial Average ETF Trust (DIA) has advanced nearly 15% year-to-date on a price-only basis, while the SPDR S&P 500 ETF Trust (SPY) is up a whopping 25%+ on a price-only basis. The Invesco QQQ Trust (QQQ) is up even more at a 27% advance in 2024 year-to-date.

On a price-only basis, the Schwab U.S. Large-Cap Growth ETF (SCHG) is up over 37% year-to-date. This beat the 7% gain witnessed by the iShares Russell 2000 Value ETF (IWN). Today, we are making some changes to the newsletter portfolios. We continue to believe that large cap growth and big cap tech is the place to be, and we’ll be further tilting the portfolios in that direction.

To that goal, in the Best Ideas Newsletter portfolio, we’re removing both Pepsi (PEP) and McDonald’s (MCD). Both haven’t performed that well during 2024, as Pepsi struggles with organic growth and McDonald’s faces headwinds from the war in the Middle East, as global comparable sales fell 1.5% in its most recent quarter. We’re replacing them with Amazon (AMZN) and Nvidia (NVDA).

The high end of our fair value estimate range for Amazon is $263 per share, with shares currently trading at ~$227 each at the time of this writing. The high end of our fair value estimate range for Nvidia stands at $180, with shares trading at ~$139 each at the time of this writing. Consistent with our view the past few years, we expect continued strength in large cap growth, and both Amazon and Nvidia increase our exposure to this area. Our reports on Amazon and Nvidia can be found here (pdf) and here (pdf), respectively.

In the Dividend Growth Newsletter portfolio, we’re removing Honeywell (HON) and McDonald’s (MCD) and adding two recent dividend initiators in their place, Meta Platforms (META) and Booking Holdings (BKNG). Meta recently started paying a quarterly cash dividend of $0.50 per share, and given its strong free cash flow generation and solid balance sheet, we’re positive on its dividend growth prospects. Booking Holdings recently initiated a quarterly cash dividend, too, of $8.75 per share, and we expect its strong free cash flow generation to propel future growth in the payout. Our reports on Meta Platforms and Booking Holdings can be found here (pdf) and here (pdf), respectively.

As we look toward 2025, we’re excited about the markets and think we’ll have another strong year of gains--but not without increased volatility as the market digests macroeconomic news related to unemployment and inflation as well as Fed speak. We continue to be bullish on the tremendous prospects of artificial intelligence and what that means for the areas of large cap growth and big cap tech, to which we have increased exposure. The portfolio changes will be reflected within the portfolios in the next respective newsletter editions.

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