Brian Nelson

Best Ideas Transaction Alert: Adding This Economic Castle

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We added a brand new 2% position to the Best Ideas portfolio today in highest-rated Economic Castle Priceline (PCLN) today. Specifically, we added 3 shares at the open price, $1,248.97.   The leader in global online hotel reservations is executing fantastically, and the firm’s valuation presents a material opportunity. Shares now register a 10 on the Valuentum Buying Index, and while we fully acknowledge the fundamental risks associated with an idea tied to cyclical end markets so late into the economic recovery, we think an adequate margin of safety exists.   The firm’s stock price is breaking through to the upside of its multi-month flagging pattern, and it now appears ripe for the picking. Investors should expect shares to be highly volatile in coming periods, … Read more

Thinking Out Loud

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I remember when I was fresh out of my undergraduate studies. I applied for a sell-side equity research position. I interviewed with a head sector analyst, and I remember the first question oh so well: What is a gross margin? It was strange. I couldn’t tell if he was joking or not. Of course I knew what a gross margin was, but was this a trick? The interview couldn’t be this easy, right? Well, after responding that a firm’s gross margin is revenue less cost of goods sold divided by revenue, let’s say that he was impressed. But I wasn’t sure why. To me, understanding what makes up a gross margin or operating margin or free cash flow margin or … Read more

Dividend Increases for the Week Ending February 20

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Below we provide a list of firms that raised their dividends during the week ending February 20. 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 Analog Devices (ADI):  $0.40 per share quarterly dividend, was $0.37. Argo Group (AGII): now $0.20 per share quarterly dividend, was $0.18. Autoliv (ALV): now $0.56 per share quarterly dividend, was $0.54. Coca-Cola (KO): now $0.33 per share quarterly dividend, was $0.305. Colgate-Palmolive (CL): now $0.38 per share quarterly dividend, was $0.36. Corrections Corporation of America (CXW): now $0.54 per share quarterly dividend, was $0.51. CVR Partners … Read more

10 Bucks per Hour; What It Really Means

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Source: US Department of Labor, Walmart Walmart (WMT) is quite savvy. The big box retailer announced February 19 it would raise the minimum wage for all of its US workers to $9 per hour in April of this year and at least $10 per hour by next February. The move comes amid ongoing public scrutiny of its labor practices, elevated worker turnover, and general malaise among the ranks on social media platforms. At face value, the news headlines show Walmart caving to public pressure, and a win for big labor, but in reality, the retailing giant is merely doing what good businesses do – pleasing customers (which are its workers, too) and widening its economic moat. Hiking wages accomplishes both. … Read more

No Interest Rate Hikes Soon, As Expected

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It wasn’t surprising to read in the FOMC minutes that the Federal Reserve is in no hurry to increase the federal funds rate. The prices of almost every commodity from crude oil and refined energy products to iron ore and copper have fallen sharply in recent months, and the strengthening of the US dollar has only accelerated the declines of dollar-denominated commodities for US-centric operators.  While we remain encouraged by the ongoing recovery in the construction and housing markets, pockets of weakness remain, and housing prices have yet to fully recover to pre-crisis levels in many parts of the country. Food prices are dropping, too – can you believe that 10 chicken nuggets at Burger King (QSR) cost a measly $1.49? There … Read more

Dividend Increases for the Week Ending February 13

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Below we provide a list of firms that raised their dividends during the week ending February 13. 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 Allegion (ALLE): now $0.10 per share quarterly dividend, was $0.08. Auburn National (AUBN): now $0.22 per share quarterly dividend, was $0.215. Cisco (CSCO): now $0.21 per share quarterly dividend, was $0.19. Coca-Cola Enterprises (CCE): now $0.28 per share quarterly dividend, was $0.25. Compass Minerals (CMP): now $0.66 per share quarterly dividend, was $0.60. Dominion Resources (D): now $0.6475 per share quarterly dividend, was $0.60. Excel Trust … Read more

What Was Once Resistance Is Now Support

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The S&P 500 (SPY) hit another new high February 13 after basing for much of the past few months. What once was resistance is now support. We find the resilience of the equity markets almost hard-to-believe. Geopolitical uncertainty, threats of an interest rate hike, foreign currency headwinds, slowing growth in the US and China, damage across the energy sector (XLE) and many other commodities, and the list goes on and on… Yet, the broader equity markets continue to notch new highs…this time on news of a whopping 0.3% growth in the Eurozone economy for the fourth quarter. Yes, you read that correctly: 30 basis points, three tenths of one percent, of expansion in a quarter that’s already in the past. … Read more

Is Apple Worth More Than $200 Per Share?

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Possibly. But we do think Apple’s stock is cheap. $727 billion. $727,000,000,000. That’s Apple’s (AAPL) market capitalization as of the close of business February 11. It’s hard to put such a huge number into perspective, but it amounts to roughly the market caps of the next two largest companies on the US market, Exxon Mobil (XOM) and Microsoft (MSFT), combined. From our perspective, Apple is finally getting credit for its sprawling and near-impenetrable ecosystem and dominance in converging technologies from the iPhone to the iPad to wearable devices. In his latest open letter that’s making headlines, Carl Icahn upped his fair value estimate of Apple to $216 from $203 due in part to higher-than-previously-forecast earnings estimates for the current fiscal … Read more

$20 Oil Prices…For Real? Investors Drinking Too Much Coke?

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I had to do a double take. Citigroup’s commodities research department issued a warning that crude oil prices (USO) could plunge to $20 per barrel “for a while.” They believe this time is different. Pointing to an oversupplied market and full storage tanks, the research outfit believes shale-oil in the US has changed the game and may sound the death knell for the cartel. We haven’t seen $20 crude oil prices since the 1990s, and even then, only for a short period of time. This is a big call. Our view, however, is that OPEC remains as powerful as ever. The fact that crude oil prices have reacted so negatively to the cartel’s commitment to producing regardless of the price … Read more

Big Buy Backs from Two Dividend Growth Portfolio Holdings

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Triple-A rated Microsoft and Hasbro are turning up the gears in buying back stock. Following what can best be described as a difficult quarter, Microsoft (MSFT) is stepping up its game in buying back its own undervalued stock. Before the end of 2016, the software giant plans to put to work the $31 billion remaining on its share repurchase program. To help it do so, the company is selling $7+ billion in debt, and the timing couldn’t be better. Shares of Microsoft are hovering just over $40 each, and with our fair value pegged in the mid-$50s, levering up the company via buying its own underpriced stock makes a lot of sense. The financial team at Microsoft is creating significant … Read more