Brian Nelson

Valuentum’s May Edition of Its Dividend Growth Newsletter!

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April Was A Great Month! by Brian Nelson, CFA I’m very excited about this edition of the Dividend Growth Newsletter! For starters, two of the holdings in the Dividend Growth portfolio – Johnson & Johnson (JNJ) and Kinder Morgan Energy Partners (KMP) – increased their respective payouts since the last update. Kinder Morgan Energy Partners now yields in excess of 7%, while Johnson & Johnson has been such an excellent performer, surpassing $100 per share, that its yield is now just shy of 3% (following the raise). We’re very happy about the pace of income growth from portfolio constituents and expect this to continue. In this edition, we highlight Abbott (ABT), as one of the ideas that we’re hoping to add … Read more

Highly-Rated Best Ideas Portfolio Holding DirecTV Catches a Bid

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At Valuentum, we think companies that are attractive from a variety of different investment perspectives–whether it be growth, value, income, momentum, etc.–have the greatest probability of capital appreciation and relative outperformance. By definition, these stocks, which we call Valuentum stocks, have strong valuation and pricing support coupled with solid revenue/earnings expansion potential and, where applicable, strong dividend growth prospects. We accept the technical market dynamic that the more deep-pocketed institutional investors that are interested in a stock for reasons based on their respective investment mandates (or preferences), the more likely it will be bought and the more likely the price will move higher to converge to its true cash-flow-derived intrinsic value (the action of buying a stock pushes its price … Read more

Earnings from 3 Internet Giants: eBay, Facebook, and Twitter

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By Brian Nelson, CFA We often receive questions about our methodology. For our new members, the Valuentum style has three distinct components: a discounted cash flow assessment (intrinsic value calculation), a relative valuation assessment, and a timeliness assessment. We’ll focus on the first pillar in this article. The Valuentum process is grounded in financial statement analysis, where our analyst team derives the ValueCreation, ValueRisk, and ValueTrend ratings of a company. Together, these ratings provide a quantitative and objective assessment of the strength of a firm’s competitive advantages, or in Warren Buffet’s terminology, the firm’s economic moat. To derive the ValueCreation rating of each company, the Valuentum team compares a company’s return on invested capital (ROIC) to its estimate of its … Read more

Earnings from 8 Interesting Ideas

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By Brian Nelson, CFA “’I believe you have to be willing to be misunderstood if you’re going to innovate.’ You can’t outperform the market if you are the market. Similarly, you must adopt a non-consensus view and be right about that view to beat competitors.” CEO of Amazon Jeff Bezos with ‘Source: 25iq’ commentary Many members have expressed to me that they just can’t believe investors select stocks in a different way than the Valuentum style (absent dividend growth investors, which have carved out a unique niche in their own right). Some of our new members think the Valuentum process is the principal and dominant framework for investing – or how the majority of investors look at things. This view … Read more

Pounding the Table on Apple’s Shares…Again

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Apple (AAPL) is a top weighting in both the Best Ideas portfolio and Dividend Growth portfolio. Need we say more? The company announced today that it is making preparations for a hefty bond sale to fund its stock repurchase program, a move that is driving the company’s shares to ‘break out’ (more info). The company looks poised for rapid price-to-fair value convergence. We think Apple is worth more than $700 per share on a split-unadjusted basis (more than $100 per share after the impending 7-for-1 split). The firm’s 16-page report and dividend report have now been updated to reflect its improving technical/momentum considerations and recent dividend increase. Shown below is how the Valuentum Buying Index helped us time our entry … Read more

Dividend Increases for the Week Ending April 25

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Below we provide a list of firms that raised their dividends during the week ending April 11. 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 1st Source Corp (SRCE): now $0.18 per share quarterly dividend, was $0.17. Altra Holdings (AIMC): now $0.12 per share quarterly dividend, was $0.10. Apple (AAPL): now $3.29 per share quarterly dividend, was $3.05. Aspen Insurance Holdings (AHL): now $0.20 per share quarterly dividend, was $0.18. Avery Dennison (AVY): now $0.35 per share quarterly dividend, was $0.29. BCB Bancorp (BCBP): now $0.14 per share quarterly dividend, was … Read more

Baidu’s Internet Presence in China Is Phenomenal

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By Brian Nelson, CFA With a population of over 1.3 billion people, more than 4 times the population of the US, China is flush with opportunities. We at Valuentum think one of the greatest long-term investment opportunities in the country has to do with ongoing Internet penetration, specifically related to search engine use and technology. Baidu (BIDU) is at the forefront of increased Internet penetration in China, and its recent results have showed fantastic sales expansion. For example, the firm noted that total revenue advanced nearly 60% in its most recently-reported first quarter from the corresponding period in 2013. For me, the relationship with Baidu goes back almost ten years when I worked at a buyside firm that was lucky to … Read more

Earnings from 15 Dividend Growth Giants

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History has revealed that the best performing stocks during the previous decades have been those that shelled out ever-increasing cash to shareholders in the form of dividends. In a recent study, S&P 500 stocks that initiated dividends or grew them over time registered roughly a 9.6% annualized return since 1972 (through 2010), while stocks that did not pay out dividends or cut them performed poorly over the same time period. Such analysis is difficult to ignore, and we believe investors may be well-rewarded in future periods by finding the best dividend-growth stocks out there. Let’s take a look at the recent performance of 15 high dividend payers and disclose their ‘valuation ratings’ and most recent Valuentum Dividend Cushion scores. Valuentum … Read more

Apple Is Back!

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Apple (AAPL) is back, and we think this means all the difference in the world when it comes to driving price-to-fair value convergence. On Wednesday, the firm put up excellent fiscal second-quarter results. As the quarterly headline suggests, strong iPhone sales in emerging markets (thanks in part to China Mobile) drove record March quarter revenue and 15% earnings-per-share expansion. The $11.62 per share quarterly earnings number exceeded the consensus estimate by more than 14%, so it was a large beat. During the period, the company generated $13.5 billion in cash flow from operations and returned almost $21 billion in cash to shareholders through dividends and share repurchases. Apple also guided revenue in the fiscal third quarter to the range of … Read more

Perhaps Nothing Stronger Than Aerospace

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In the world of investing, the strength of the industry in which a firm operates is sometimes as important as the company itself. A strong industry backdrop offers the potential for fundamental upside as the industry revenue pie grows. Said differently, it is much easier for a firm to do well in an expanding industry, where both the industry’s revenue pie is growing and market share opportunities are available, than it is for a firm to do well in a shrinking industry, where it may have to battle entrenched competitors in a pricing death match to gain share. Though commercial aerospace will always be cyclical (as it relates to order trends) and pricing competitiveness will always be present, the massive … Read more