Brian Nelson

Bioverativ: A Profitable Rare Drug Company

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The biotech sector remains one of the most innovative segments of the overall market. Cutting-edge research is being conducted to help treat a wide swath of disease states with the potential for outsize rewards if the novel treatment is proven effective. The boom-bust nature of clinical research has lead to numerous spectacular flameouts, which lessen the appeal of the sector to the more risk-averse investor. We have identified a promising newly-formed company with real earnings, and one that may be poised to accelerate earnings now that a promising new rare-disease molecule has been brought into the fold. By Alexander J Poulos Overview of Bioverativ Biovertaiv (BIVV) is a newly-formed entity that was spun off from Biogen (BIIB) in early 2017. … Read more

Our Bullish Thesis on Gilead Sciences

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We have become enamored with the potential of Gilead Sciences once again as the recent slide in the share price has in our view shaken out the speculative money that fueled the meteoric rise of the equity in 2015. As a value-based research publisher, we tend to focus on the sustainability of cash flow. In the case of Gilead, many believed that all hope had been lost as the continued decline in its Hepatitis C franchise would depress potential future gains. We are heartened by the recent earnings release and technical move, which have combined to give us comfort in adding Gilead Sciences to both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio. By Alexander J. Poulos Overview … Read more

Video: Explaining the Valuentum Buying Index

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The Valuentum Buying Index (VBI) stands on the shoulders of giants in finance in uncovering investment ideas.  Brian Nelson, CFA: This is Brian Nelson from Valuentum Securities. Today, I would like to talk about our Valuentum Buying Index, the stock selection methodology that we use and apply across our entire coverage universe. But before I get into some of the specifics, I’d like to provide more or less a summary. Essentially what the Valuentum Buying Index does is it highlights undervalued stocks that are going up in price. Undervalued stocks with good momentum…Value-ntum stocks. So, at the core, the Valuentum Buying Index tries to find stocks that we think have a very strong likelihood of equity price appreciation. It breaks … Read more

Apple, Hanesbrands Power Higher

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Image shown: Performance of the S&P 500 SPDR (SPY) since the beginning of 2017. There aren’t two other companies within the Dividend Growth Newsletter portfolio that may be more controversial positions than Apple and Hanesbrands — one is on the cutting edge of technology and the other makes T-shirts and underwear, a very interesting dichotomy. By Brian Nelson, CFA The stock market continues to roar ahead, and the latest rally is starting to set some new records. According to Charlie Bilello at Pension Partners, the S&P 500 (SPY) currently has the fourth-longest streak in history without a 5% drawdown, at 275 consecutive trading days. That’s incredibly low volatility. The S&P 500 now also has had 9 consecutive months where it … Read more

Coca-Cola, Pepsi, Kimberly-Clark: Great Businesses But Lofty Earnings Multiples and Net Debt Positions

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We love the business models of some of the most well-known consumer-staples equities, namely Coca-Cola, Pepsi, and Kimberly-Clark, but lofty earnings multiples and net debt positions complicate their investment prospects. Little to no top line growth only further muddies the picture. The biggest risk to the (consumer staples) group, in our view, has little to do with the underlying fundamentals of the businesses, which are solid to a very large degree, but more due to the overall sector valuation. According to FactSet, as of July 2017, the forward 12-month price-to-earnings ratio for the consumer staples sector is roughly 20 times at the time of this writing, significantly higher than its 5-year and 10-year averages of 18.3 and 16.2 times, respectively. … Read more

Business Models of Garbage Haulers “Hitting on All Cylinders”

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Image Source: Waste Connections In a sign of the health of the US economy, garbage haulers are experiencing rates of top-line growth not witnessed in years, but their earnings multiples reflect share prices that may be disconnected from normalized fundamentals. No matter how much we love their business models, we’ve already “cashed in” our chips. By Brian Nelson, CFA Industry economics in the municipal solid waste industry are generally easy to understand. Industry pricing power essentially emanates from disposal operations. Waste generated, for example, must end up somewhere, and therefore whichever entity has the disposal operations has the power to set the bar with respect to pricing, directly or indirectly, from transfer facilities all the way through collections within certain … Read more

Amazon’s Free Cash Flow and Balance Sheet Health Impressive

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Amazon’s share-price performance is a sign of these “frothy” times. By Brian Nelson, CFA We love Amazon’s (AMZN) products and how it makes millions of people’s lives better each and every day. We hear what the “bulls” are saying, too–about top-line expansion and the company’s second quarter being a period of greater investment–but earnings and free cash flow matter. If not today or tomorrow or a few years from now, they will eventually. For Amazon, as strong as its free cash flow generation and net cash position on the books are, the combination doesn’t justify its current lofty valuation. The stock trades at over $1,000 per share at the time of publishing, and it’s almost laughable, by comparison, that we … Read more

Intel’s Shares Trading at Huge Discount to Market

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Image Source: Intel Newsletter portfolio holding Intel continues to put up strong results, and the market is simply not giving it credit for them. By Brian Nelson, CFA We were generally pleased by Intel’s (INTC) second-quarter report, released July 27. In a market environment, where other equities with little-to-no-growth are garnering outsize multiples, Intel registered top-line expansion of 9% on a year-over-year basis in the quarter, while it raised its non-GAAP earnings per share outlook for 2017 by $0.15, to $3.00, implying shares are trading at a very modest ~12 times current-year numbers. We would say Intel’s shares are a bargain in most any market, but especially in this one, where the average S&P 500 company is trading at 17.7 … Read more

Newsletter Notifications — July 31

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Boeing (BA) has been an incredible performer since it was added to the portfolio of the Dividend Growth Newsletter just a few short months ago. We are making a number of changes to the newsletter portfolios today. Important upcoming dates   Release date of August Dividend Growth Newsletter — the evening of August 1.   Release date of August Nelson Exclusive publication — the evening of August 5.   Release date of August Best Ideas Newsletter — the evening of August 15.    Newsletter portfolio changes   Boeing (BA): We added the top-performing stock in the Dow Jones Industrial Average in 2017 to the Dividend Growth Newsletter portfolio in January of this year at $168.44 per share. Shares have simply surged, and we’re not … Read more