Brian Nelson

Best Ideas Newsletter Holdings Surge

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It’s hard for us to not be able to recommend stocks to you. That’s not what we do. We’re not a financial advisor, so we can never tell you what to buy or sell. This is not only the responsible thing to do, but it is also the law. We can’t possibly know your personal financial goals or risk tolerances. We do our best, however, to highlight our business analysis and the market mispricings that we see. Stocks that we pound the table on are included in the Best Ideas Newsletter portfolio. Stocks that we like as dividend growth ideas are included in the Dividend Growth Newsletter portfolio. We’ll be adopting a new designation for these companies in lieu of … Read more

J&J’s Quarterly Results Not Reflective of Underlying Strength

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Dividend Growth Newsletter portfolio holding Johnson & Johnson (JNJ) reported 2015 second-quarter results July 14. Though the healthcare and consumer goods giant experienced quarterly revenue and adjusted earnings-per-share declines of 8.8% and 3.9% during the period, respectively, both numbers beat consensus estimates. Divestitures and currency headwinds weighed heavily on reported results, with currency negatively impacting revenue by 7.9%. Revenue–excluding divestitures, acquisitions, and the impact of currency exchange–advanced 1.7% in the quarter; though this wasn’t great, the modest quarterly organic increase was nowhere near the pace of the reported top-line decline. More encouraging was the firm’s profitability in the quarter. Though adjusted net earnings and adjusted diluted earnings per share declined 6.3% and 3.9%, respectively, adjusted diluted earnings per share increased … Read more

Kinder Morgan Continues Down Unsustainable Path

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Kinder Morgan’s (KMI) second-quarter results, released July 15, left much to be desired. Internal measures of distributable cash flow are coming in lower than previous expectations and its total debt continues to advance to uncomfortable levels, approaching ~5.8 times annualized EBITDA, as disclosed in the second-quarter release. Though we maintain our view that Kinder Morgan has a fantastic business model with lucrative fee-based contracts and substantial cash-flow generating capacity, the risks associated with the company’s capital structure and future dividend obligations overwhelm such positives. We remain convincingly on the sidelines; our fair value estimate of $29 per share remains unchanged.  We continue to be impressed with Kinder Morgan’s excellent levels of transparency and disclosures, but the information included in the … Read more

Valuentum’s Nelson in Cleveland

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Brian Nelson, CFAPresident, Valuentum Securities Brian Nelson, president of Valuentum Securities, will walk through the ins and outs of cash-flow-based dividend analysis. He’ll cover how to use Valuentum.com to find what you’re looking for and showcase the firm’s discounted cash flow methodology that forms the backbone behind the ideas he generates. Nelson will also present the structural reasons why the Valuentum Buying Index works.  YOU WILL LEARNThe benefits of dividend growth investingHow to find the best dividend growth stocksHow to reduce the likelihood of getting into a value trap BIOBrian Nelson, CFA holds a B.A. in finance with a minor in mathematics and graduated magna cum laude from Benedictine University. He has an MBA from the University of Chicago. He … Read more

Warning! 5 Heavily-Followed Dividend-Paying Stocks to Avoid

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Zoetis (ZTS) The share price of Zoetis, the leader in the production and commercialization of animal health medicines and vaccines, is trading at a substantial premium to its standalone intrinsic value as a result of speculative optimism that a takeout of its shares might happen. Activist Bill Ackman’s near-10% stake in the 2013 spin-off of Pfizer (PFE) has investors believing a deal may be in the works, but there’s no real evidence of one. In fact, it appears investors are desperate to see something (anything?) happen: on June 25, for example, Zoetis leapt more than 10% immediately on unfounded rumors that Valeant Pharma (VRX) was putting together a bid. We don’t think a buyout of Zoetis is going to happen … Read more

Procter & Gamble Continues Transformation Plan

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Dividend Growth Newsletter portfolio holding Procter & Gamble (PG) announced July 9 it has signed a definitive agreement to merge 43 of its beauty brands with Coty (COTY) for $12.5 billion, in what is likely to be a Reverse Morris Trust transaction. The transaction will include Procter & Gamble’s ‘Salon Professional’, ‘Retail Hair Color’, and ‘Cosmetics and Fine Fragrance’ businesses, along with select hair styling brands. This is a major step forward in the firm’s portfolio transformation plan, in which it intends to whittle its portfolio to 65 brands in 10 business categories that encompass the company’s core competencies. As the company previously outlined, Procter & Gamble plans to divest, discontinue, or consolidate 100 of its brands and exit several … Read more

Microsoft Restructuring Phone Hardware Business, PC Environment Remains Challenging

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Dividend Growth Newsletter portfolio holding Microsoft (MSFT) announced the restructuring of its phone hardware business July 8. In addition to a restructuring charge in the range of $750-$850 million, the company will record an impairment charge of ~$7.6 billion related to assets from the acquisition of the Nokia (NOK) Devices and Services business, which closed just under a year ago. Microsoft also announced it will cut up to 7,800 jobs, primarily in the phone business. The non-tax-deductible impairment charge will be recorded in the fourth quarter of fiscal 2015, which ended June 30, and the job cuts are expected to take place over the next several months. These sweeping initiatives underscore Microsoft’s efforts to refine its focus to meet ever-changing … Read more

June Sales Keep Auto Industry on Track for Best Year in A Decade

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Key Takeaways The auto industry continues its strong comeback in 2015. Volume and profits are growing, and the industry is poised for a banner year. SUV and light truck demand are the primary drivers behind the sales growth, as the drop in gasoline prices slows purchases of smaller, more fuel-efficient cars. America’s best-selling line, the Ford F-Series, remains in limited supply, even as demand for the truck line remains high, but other producers, including GM, are looking to take advantage of the mismatch. Toyota remains the top-selling retail brand in the US, despite weak industry-wide car sales. June US auto sales, according to Autodata Corp, increased 3.9% over the year-ago period to a total of 1.48 million units, the most … Read more

Teva Pharmaceuticals Committed to Acquiring Mylan

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Image source: Teva July 5 investor presentation We have been adamant on our stance on Best Ideas Newsletter portfolio holding Teva Pharmaceuticals (TEVA) since the initiation of our thesis on the generics industry in June 2013, shortly before we initiated our position in the firm. Since then shares have advanced nearly 50%, and we’ve continued to let this winner run.   A large portion of Teva’s success has been tied to the incredible performance of Copaxone, the leading multiple sclerosis therapy worldwide. In the first quarter of 2015, the drug alone comprised 18.5% of revenue, while contributing an astounding ~55% of net income. These figures are down from the year-ago period–and the majority of its production life–due in part to … Read more