Brian Nelson

Cardinal Health: An Undervalued Free Cash Flow Generating Powerhouse

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Image Source: Lisa Brewster Cardinal Health reset investor expectations lower when it cut its fiscal 2017 guidance late October. The company operates in an attractive oligopolistic industry and is trading at less than 14 times current fiscal-year earnings with a free cash flow yield north of 10%. Is it worth a look? By Alexander J. Poulos and Brian Nelson, CFA Overview The bulk of Cardinal Health’s (CAH) massive $120 billion revenue stream is generated from the distribution of healthcare needs. The company operates a network of warehouses whose primary purpose is to distribute healthcare products to a broad swath of customers ranging from your local drug store to hospitals. Due to the expense and unpredictability of inventory needs, customers prefer … Read more

Pedal to the Metal for GM Heading Into 2017

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Image Source: Abdullah AlBargan By Kris Rosemann Newsletter portfolio holding General Motors (GM) expects to report company records for revenue, EBIT-adjusted, and EBIT-adjusted margin for the full-year 2016 later this quarter, but its 2017 expectations are cause for even more optimism after management presented updated guidance for the year at the Deutsche Bank 2017 Global Auto Industry Conference in Detroit January 10. We continue to like GM’s valuation and dividend growth opportunity, and the company remains a position in both newsletter portfolios. The automaker expects 2017 earnings per share on an adjusted and diluted basis to come in a range of $6.00-$6.50, compared to expectations of $5.50-$6.00 for 2016. It also expects to at least maintain 2016 levels of EBIT-adjusted and … Read more

MLPs: Williams’ Double Equity Raise

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Image Source: Roy Luck By Kris Rosemann and Brian Nelson, CFA Valuentum’s opinion of the significant capital-market dependence of the master limited partner (MLP) business model has not changed, and it appears the Williams’ family, Williams Companies (WMB) Williams Partners (WPZ), has become the latest illustration of this ongoing need. We maintain our view that there will be continued challenges to the MLP structure in the coming years, particularly in the event energy resource prices start to give back some of their recent gains and/or if high-yield spreads begin to expand (making borrowing more costly, irrespective of what the 10-year Treasury does). However, with energy resource pricing improving since the doldrums of January/February and the high-yield market warming up to … Read more

Teva’s Near-17% Free Cash Flow Yield; Is The Bottom Finally In?

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What a roller coaster ride in Teva’s shares. After converging to intrinsic value, Teva’s shares have fallen from grace. Unfortunately, our excitement over this big winner has turned to agony. But is the bottom finally in? What has happened in the past is now behind us, and we have to continue to look forward with respect to our analysis of shares. By Alexander J. Poulos and Brian Nelson, CFA Best Ideas Newsletter portfolio holding Teva Pharmaceuticals (TEVA) continues to suffer along with the entire healthcare complex as we usher in the New Year. Once a big winner in the Best Ideas Newsletter portfolio even just a few months ago, shares have now fallen from grace. We’re not happy about this … Read more

Dividend Increases/Decreases for the Week Ending January 6

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Below we provide a list of firms that raised/lowered their dividends during the week ending January 6. 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 Alamo (ALG): now $0.10 per share quarterly dividend, was $0.09. Atrium Mortgage Investment (AMIVE): now C$0.073333 per share monthly dividend, was C$0.071667. Bank of the Ozarks (OZRK): now $0.17 per share quarterly dividend, was $0.165. Brixmor Property (BRX): now $0.26 per share quarterly dividend, was $0.245. CenterPoint (CNP): now $0.2675 per share quarterly dividend, was $0.26. Enbridge (ENB): now C$0.583 per share quarterly dividend, was C$0.53. … Read more

Looking Closely at Zimmer Biomet

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Medical technology companies have taken their share of lumps as of late, but the long-term may be too bright for investors to ignore Zimmer Biomet’s shares. By Alexander J. Poulos and Brian Nelson, CFA The medtech field offers an intriguing combination of high-margin growth coupled with defensive characteristics as the end product is considered recession resistant. To add context, an individual who requires a knee transplant may wait a bit before having the surgery, but as the joint disintegrates the need will hasten irrespective of economic conditions. The ebbs and flows of the economic cycle have little to do with such a decision, in most cases. That said, the field remains fiercely competitive with many upstarts that have innovative technologies, … Read more

CVS Health In The Bargain Bin? We Think So

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Image Source: Mike Mozart By Alex Poulos The stock market can be a fickle creature, bestowing its affections seemingly upon random industries. As 2016 comes to a close, the financial and energy-related names are all the rage with many pundits gushing about their prospects in 2017. I have often found when the Street is waxing eloquently about a certain sector, most of the easy gains have been made. Often, a contrarian view is necessary to generate acceptable returns. An unusual opportunity is before us in a company that operates in one of the most unloved fields of all, healthcare. CVS Health CVS Health (CVS) is generally categorized in the consumer staples (XLP) sector of the S&P 500, yet over 85% … Read more

General Motors Gains US Market Share in December; Shares Racing Higher

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Image Source: Tina Rossini By Kris Rosemann The US auto industry set yet another annual sales record in 2016, and General Motors (GM) finished the year on a high note, reporting total sales growth of 10% on a year-over-year basis in the month of December and retail sales growth of more than 3%. Though some market observers fear the industry may be reaching a peak, GM looks poised to continue reaping the benefits of a strong US auto market. The higher-than-anticipated gains helped the company grab additional market share in the US in both the total US auto market and the US retail auto market, where GM’s market share advanced 150 basis points and 30 basis points, respectively. GM now … Read more

Dividend Increases/Decreases for the Week Ending December 30

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Below we provide a list of firms that raised/lowered their dividends during the week ending December 30. 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 Fifth Street Asset Management (FSAM): now $0.125 per share quarterly dividend, was $0.10. Formula Systems (FORTY): now $0.48 per share semi-annual dividend, was $0.34. Raymond James Financial (RJF): now $0.22 per share quarterly dividend, was $0.20. Stryker (SYK): now $0.425 per share quarterly dividend, was $0.38. W.P. Carey (WPC): now $0.99 per share quarterly dividend, was $0.985. Firms Lowering Their Dividends This Week                                   Tortoise Index Solutions … Read more

Dividend Growth Newsletter: Evaluating Our 2016 Dividend Growth Picks

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“…the average return of our dividend growth picks has blown the return of the S&P 500 out of the water during the past two years, and in each of the past two years.” By Brian Nelson, CFA What say us of our dividend growth stock-selection skills? First, on a portfolio level, I am very proud to say that the Dividend Growth Newsletter portfolio has advanced in each of the past two years, while the SPDR S&P Dividend ETF (SDY) has been significantly more volatile, declining during 2015, and bouncing back during 2016. For supposedly steady-eddy dividend growth indices, they tend to be quite volatile relative to the Valuentum Dividend Growth Newsletter portfolio, one of the main reasons why I don’t … Read more