Brian Nelson

Walmart and Target Both Beat Expectations

by

Big box retailers have showcased some resilience during the third quarter, with Home Depot (HD), Lowe’s (LOW) and Dick’s Sporting Goods (DKS) posting relatively strong results. Walmart (WMT) and Target (TGT) also followed through with respectable quarters, and we think this bodes well for most of the group heading into the holiday season. Walmart’s third-quarter results, released November 13, showed consolidated net sales advancing 2.8% with US comparable store sales increasing 0.5% for the 13-week period ended October 31, 2014. Walmart has been under competitive attack from a variety of fronts. Not only is Target its key rival, but dollar stores such as Family Dollar (FDO), Dollar General (DG) and Dollar Tree (DLTR) have been nipping at its heels through … Read more

Medtronic Surpasses $70 Per Share

by

Interested in what the path of Medtronic’s (MDT) equity price has been since it was added to the Dividend Growth portfolio? Incredible, no? It’s so important that we point to our favorite ideas such that you can become familiar with our track record. We don’t get everything correct, but our hit rate on new ideas has been near perfect. Unlike other research houses, we take to heart Warren Buffett’s two rules:  Rule No. 1: “Never lose money. Rule No. 2: Never forget rule No. 1.” This is why it may be a few weeks or a few months between each email transaction alert we send out to members. We want to deliver only the best. If we were interested in … Read more

Home Depot, Dick’s Sporting Goods Report Strong 3Q Results

by

Tuesday brought a couple solid reports from the consumer discretionary sector (XLY). Home Depot (HD), which we think is a better operator than peer Lowe’s (LOW), posted an impressive comparable-store sales increase during the third quarter, while Dick’s Sporting Goods (DKS) showcased a strong high-teens pace of top-line expansion in the period. Our reasoning behind Home Depot’s operating superiority relative to Lowe’s is worth repeating. For starters, the most important metric to judge a business is return on invested capital (ROIC), or the amount of earnings (before interest) that a firm generates divided by the amount of capital that it must hold in the business in order to generate that earnings stream. Return on invested capital is not a pure … Read more

Dividend Increases for the Week Ending November 14

by

Below we provide a list of firms that raised their dividends during the week ending November 14. 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 Automatic Data Processing (ADP): now $0.49 per share quarterly dividend, was $0.48. CBL & Associates Properties (CBL): now $0.265 per share quarterly dividend, was $0.245. Dow Chemical (DOW): now $0.42 per share quarterly dividend, was $0.37. General Growth Properties (GGP): now $0.17 per share quarterly dividend, was $0.16. Griffon (GFF): now $0.04 per share quarterly dividend, was $0.03. Group 1 Automotive (GPI): now $0.19 per share quarterly … Read more

Cisco Is Breaking Out

by

We’re adding Cisco (CSCO) to both the Best Ideas portfolio and Dividend Growth portfolio. Communications networking giant Cisco recently registered a 9 on the , and the firm’s dividend has always been one of the strongest in our coverage. Shares yield ~3% and boast an incredible 3.4 ratio on the Dividend Cushion. These marks are very similar to one of our other dividend growth favorites, Microsoft (MSFT). Both tech giants benefit from huge cash positions on the balance sheet, a characteristic that we view as vital to a sustainable and growing dividend.  Though Cisco has registered a 9 on the Valuentum Buying Index before (at $15.82 in September 2011 and at $19.06 in August 2012), we’ve been hesitant to add shares to … Read more

Look Out Below: Crude Oil Prices Continue to Tumble

by

West Texas Intermediate crude oil (Dec’14) fell under $75 per barrel today, now almost $30 lower than its 52-week high, reaching the lowest level since September 2010. Brent crude also fell to a four-year low. We view the move in crude as a net-negative for the economy and S&P 500 earnings, even though many from transportation to retail will benefit from lower energy costs. The energy sector accounts for roughly 10% of the S&P 500 (SPY), and ExxonMobil (XOM) and Chevron (CVX) top the index’s top 10 holdings.  We think falling crude oil prices are more a reflection of expectations for declining global economic activity, which in itself, signals that trouble is on the horizon. North American shale production continues … Read more

Berkshire Scoops Up Duracell; Hasbro Ponders Dreamworks

by

Edited November 14, 2014. We should have known that Warren Buffett (BRK.A, BRK.B) was interested in acquiring Procter & Gamble’s (PG) battery business, Duracell. Today, we found out that he was. In exchange for a recapitalized Duracell Company, including $1.7 billion in cash at closing, Berkshire Hathaway will fork over $4.7 billion worth of Procter & Gamble shares to the former parent to bring Duracell’s operations into Berkshire Hathaway. The transaction is expected to close in the second half of 2015. We think it’s mostly a win for Procter & Gamble. The company had announced its decision to shed Duracell in its most recent quarterly report, a move we had been heavily in favor of. Based on trading action following … Read more

A Sneak Peek at Valuentum’s Slides for the AAII Presentation in Chicago This Saturday!

by

Let’s take a sneak peek at President Brian Nelson’s slides for this weekend’s presentation in Chicago! Firms mentioned: MSFT, GOOG, AIR, BRCM, CSCO, SPY, AAPL, QCOM, MA, DPZ, SVU, RNDY, DDE, STRA, EXC, CLF, PBI, CTL, JCP and others. <select image to download the slide deck>

Homebuilders Bucking Downtrend

by

Homebuilders have a reason to be optimistic as of late. Not only has the SPDR S&P Homebuilders ETF (XHB) firmed up, but Toll Brothers (TOL) released strong fundamental news, helping to buoy the industry. Toll Brothers operates at the high-end of the homebuilding industry. Its average home price, for example, has historically been ~$650,000 compared to ~$300,000 for its publicly-traded peers. As a result, we’d view Toll’s main competitors as small private builders catering to luxury demographics, not necessarily the large public builders. The firm’s performance, however, is worth watching as yet another data point with respect to the industry’s health. Pent up housing demand has been accruing for years, and new home inventory is limited, which makes for an … Read more