Brian Nelson

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

Throwing In the Towel on Intuitive Surgical

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Intuitive Surgical (ISRG) has admittedly been Valuentum’s worst call, and soon, it will be the only long position that will have been removed from the Best Ideas portfolio at a loss. We’ve been whipsawed around so much with this company that getting a pulse on the business has become near impossible. You can read about ‘The Curious Case of Intuitive Surgical…” here and our now-embarrassing note here about how happy we were to get back to even, but the final straw came in the past few weeks. We understand that the firm is navigating through a difficult market environment that was punctuated by the growing negative perception regarding robotic surgery, even if robotically-assisted minimally-invasive surgery is a favorable long-term trend … Read more

Big News in Big Pharma

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Pfizer Held Talks to Acquire AstraZeneca “Pfizer Inc. (PFE), the world’s biggest drugmaker, held informal, now-discontinued talks with AstraZeneca Plc (AZN) about buying the London-based maker of asthma and heart drugs, said two people familiar with the matter… …The companies aren’t currently negotiating, said the people, who asked not to be identified. One said the talks happened several months ago and there are no plans to resume. The discussions were first reported yesterday by London’s Sunday Times, whose unnamed bank and industry sources said New York-based Pfizer made a tentative approach about a takeover valuing AstraZeneca at more than 60 billion pounds ($101 billion).” (Source: Bloomberg) To continue reading >> Valeant and Activist Investor Bill Ackman Pursue Allergan “Canada’s Valeant … Read more

Restaurant Industry Update

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The fast-food (quick-service) breakfast wars have intensified. It has become a high-stakes game for all participants, and most have gone all-in to capture market share, to use poker parlance. The NPD Group, a leading global information firm, noted that the pace of expansion for fast-food breakfast across the restaurant industry has been a key bright spot, and executives across the industry are taking note: Quick service, which accounts for about 80 percent of total restaurant morning meals, showed the strongest increase in breakfast visits of all restaurant segments with a 4 percent increase in the year ending December 2013 period compared to year ago, reports NPD CREST, which every day tracks how consumers use restaurants and other foodservice outlets. Morning … Read more