Brian Nelson

The Cola Wars: Currency Headwinds Intensify; Snacks Looking Better

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We live in a thirsty world. Global non-alcoholic ready-to-drink (NARTD) consumption is expected to advance at nearly a 6% compound annual growth rate over the next four years. Since the beginning of this decade, NARTD retail value has increased by $135 billion, and the market is expected to grow by another $300 billion before the end of 2020. The global beverage industry is fueled by a number of global macro trends: 20% growth in urban population, 70% increase in personal expenditure per capita, 50% growth in middle class, and 1 billion teens today. Coca-Cola (KO) and Pepsi (PEP), which both reported results last week, are poised to benefit from these strong market demand trends, and Pepsi has a faster-growing snacks … Read more

Dividend Increases for the Week Ending April 18

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Below we provide a list of firms that raised their dividends during the week ending April 18. 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 CSX (CSX): now $0.16 per share quarterly dividend, was $0.15. Discover Financial Services (DFS): now $0.24 per share quarterly dividend, was $0.20. Donegal Group, Inc. (DGICA): now $0.1315 per share quarterly dividend, was $0.1275. Kinder Morgan (KMI): now $0.42 per share quarterly dividend, was $0.41. Kinder Morgan Energy Partners (KMP): now $1.38 per share quarterly dividend, was $1.36. LyondellBasell Industries (LYB): now $0.70 per share quarterly … Read more

Google’s First-Quarter Performance: Business as Usual

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On Wednesday, Google (GOOG) reported decent first-quarter results. The search giant’s revenue increased across-the-board on a year-over-year basis: Google properties revenue advanced 21%, network revenues increased 4%, while other revenues jumped nearly 50%. This is impressive year-over-year performance for any firm regardless of its size, but the market had expected even more from the Internet behemoth. What spooked investors a bit was that Google’s revenue declined across-the-board on a sequential basis (from the December quarter to the March quarter), representing somewhat of a divergence from recent historical patterns. Nonetheless, we put greater weight on the year-over-year numbers because they correct for seasonality. While we liked what we saw in the first quarter, the market is not necessarily incorrect in its … Read more

IBM Continues to Lose Its Luster

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Share buybacks are not always a good thing. We typically like a firm’s buyback program if it is executed at a level below that of the company’s cash-flow-derived intrinsic value estimate. The buyback activity at these levels creates value in the sense that the cash reduced on the balance sheet (as a result of the repurchases) is less than the positive impact of a lower share count (equity value is divided by shares outstanding to arrive at intrinsic value per share). Under a scenario where a company buys back stock above its intrinsic value estimate, management is effectively destroying shareholder capital – the cash reduced on the balance sheet (as a result of the repurchases) is more than the positive … Read more

Expect Abbott to Raise Its 2014 Outlook Soon

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We’ve always liked Abbott (ABT). The company has been one of the most successful companies for more than 125 years. The firm has leadership positions in a number of attractive markets such as ‘Diagnostics’ – where it is #1 in immunoassay diagnostics and #1 in blood screening – and ‘Nutrition’ – where it boasts brand names such as Similac, Ensure, and PediaSure, leading to its #1 worldwide position in both worldwide adult nutrition and US pediatric nutrition. The firm’s ‘Branded Generics’ segment has strong positions in emerging markets, while its ‘Medical Devices’ segment is #1 in drug-eluting stents, #1 in bare metal stents, and #1 in LASIK. Abbott continues to execute nicely. On Wednesday, Abbott reported solid first-quarter results. On … Read more

Another New High for GE’s Industrial Backlog!

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General Electric (GE) has taken a number of steps to position itself for future success, and reduced reliance on GE Capital Corp (GECC) remains a sound trajectory. Not only do we think that increased transparency and potential monetization of a portion of its far-reaching financial operations is a prudent idea (particularly given the recent lessons learned from the Financial Crisis), but the move also frees up the executive suite to focus on driving top-notch performance at its industrial operations. Clearly, we’re already seeing the potential of this “new GE,” and we like it very much. Image Source: GE On Thursday, GE reported excellent first-quarter results. One of the most important indicators of GE’s industrial business potential is the trend in … Read more

Intel Continues Its Move to $30 Per Share

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Frankly, it’s hard not to like Intel (INTC). The company dominates the microprocessor and chipset market, and while rivals can adapt quickly in the land of technology, continuous research and development keeps the firm a step ahead of the competition. If that weren’t enough, the company is simply a cash-flow machine, and its annual dividend payout is not only safe on the basis of the Valuentum Dividend Cushion score but also is poised to grow into the future. A strong competitive position, an attractive valuation, and a safe and growing dividend are a few qualities that make the company a Valuentum stock. It is held in both the Best Ideas portfolio and Dividend Growth portfolio. Intel’s goal is to be … Read more

Valuentum’s April Edition of Its Best Ideas Newsletter!

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Oh…The Weather In Chicago, by Brian Nelson, CFA A lot of members have emailed me over the past several months. I very much appreciate the conversation and the sincerity of our member base. I think Valuentum members are genuinely the nicest out there. They understand what we’re trying to do and really appreciate the efforts of the team. It is both an honor and a pleasure to work with every one of you! Please don’t ever forget that. You’re class is one of a kind. A few of our new members asked a little about me personally, but for those that don’t know me, I live in the Chicagoland area with my beautiful wife and baby boy… To continue reading, please … Read more

Johnson & Johnson’s Patent Expiration Profile Is Fantastic

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Very few firms have a more attractive investment profile than Johnson & Johnson (JNJ). On Tuesday, the consumer products and healthcare company showed us why when it reported better-than-expected first-quarter performance on both the top and bottom lines. The company continues to drive outperformance in the Dividend Growth portfolio as it approaches $100 per share. Operating sales during the period jumped 5.3% compared to the same quarter a year ago, consisting of 2.2% domestic expansion and 7.9% international growth. Excluding one-time items, net earnings for the quarter came in at $4.4 billion and diluted earnings per share came in at $1.54, representing advances of 7.8% and 6.9%, respectively, compared to last year’s quarter. Management credited successful new product launches and continued growth … Read more