Brian Nelson

Tweeting on Thursday

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Thursday was jam-packed with news. Let’s jump to an abbreviated ‘Valuentum Take’ on each major news item in the spirit of Twitter’s (TWTR) 140 character limit. We don’t intend to do this too frequently, but we wanted to get our take out there in a timely fashion. We’re available for any questions. Tweeting on Thursday AK Steel $AKS issues strong outlook, but #steel industry far from attractive, among the worst in our coverage. Tibco $TIBX issues poor outlook, while Red Hat $RHT exceeds expectations, puts up strong billings growth; both firms fairly valued. Linn Energy $LINE back on track as SEC endorsement improves sentiment; we prefer $KMP and $ETP in DG portfolio. Darden $DRI to part with Red Lobster; core … Read more

Valuentum Website Update

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Dear Members, This morning, we rolled out new content that will make Valuentum.com more and more of a destination site for its members. Thanks to QuoteMedia, we’ve added the cleanest (ad-free) feed of press releases that we could find to our ‘Symbol’ search results page. Just by entering in the firm’s stock symbol in the ‘Symbol’ search box in the website header as you’ve always done, members can now access corporate press releases on desired firms in a section under the commentary area of the search results page (red box below). In a world cluttered with financially-biased content and information, we seek to provide a fresh voice for investors. We expect to continue to add unbiased content to the independent suite of research available on Valuentum.com in the years ahead. We hope you enjoy!  … Read more

Highlighting the Fed’s Statement Regarding Asset Purchases

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<< Board of Governors of the Federal Reserve System, Release Date December 18 Release Reproduced Below: Information received since the Federal Open Market Committee met in October indicates that economic activity is expanding at a moderate pace. Labor market conditions have shown further improvement; the unemployment rate has declined but remains elevated. Household spending and business fixed investment advanced, while the recovery in the housing sector slowed somewhat in recent months. Fiscal policy is restraining economic growth, although the extent of restraint may be diminishing. Inflation has been running below the Committee’s longer-run objective, but longer-term inflation expectations have remained stable. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that, … Read more

FedEx, Ford and Facebook Topping News

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On Wednesday, FedEx (FDX) reported slightly lower-than-expected bottom-line performance in its fiscal second-quarter results. Revenue advanced 3% during the quarter, while reported operating income leapt 15% thanks to roughly 80 basis points of operating-margin improvement. Adjusted for the effects of Hurricane Sandy, however, year-over-year performance wasn’t that great. The firm’s quarterly earnings per share mark of $1.57 compares to an adjusted measure of $1.50, or a 4.7% increase, which itself was augmented by its share-repurchase program. Free cash flow was negative during the six months ended November 30, 2013, consistent with the cash use during the prior-year period. The company experienced improved yield and cost management (and materially better operating margin performance) at FedEx Express (its largest operating segment), but … Read more

Has the Time for Robots Finally Arrived?

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The 1980s were filled with ideas that robots would take over our personal lives. There was, of course, The Terminator, which ingrained a sense of fear within society about the potential dangers of advanced robotic use. But there were other “friendlier” movies, too. Who could forget the beloved ‘Johnny 5’ in Short Circuit or Paulie’s robot “girlfriend” in the fourth installment of the Rocky series? Unlike depicting a robotic assassin from a post-apocalyptic future, these movies showed the humanization of robots with feelings like fear and love. Are we now re-living a bout of 1980s nostalgia, with Amazon (AMZN) and UPS (UPS) recently talking about unmanned flying drones delivering packages to consumers’ door steps? It’s probably not too far of … Read more

The Dichotomy of Airlines and Aerospace

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On Monday, top insurance idea AIG (AIG) announced that it would sell International Lease Finance Corporation (ILFC) to aircraft leasing firm AerCap Holdings (AER) for $5.4 billion, consisting of $3 billion in cash and the balance in newly-issued AerCap common shares. Though we think ILFC was one of the crown jewels of AIG’s business particularly considering the prospects for global air travel demand in coming years, the price is fair and opportunistic, especially since AerCap is risking its investment-grade status to facilitate the deal. We don’t think better terms could have been had by either party, given financial constraints, and shares of both entities are moving higher on the news. The combined AerCap-ILFC will be #2 on the world stage … Read more

Valuentum’s December Edition of Its Best Ideas Newsletter!

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Prudence Will Be Rewarded, by Brian Nelson, CFA There are a number of ways members use our research. Some members use the Best Ideas portfolio and Dividend Growth portfolio for idea generation; others like our systematic stock-selection process (fair value estimates, Valuentum Buying Index ratings) that allows for the comparison of ideas across sectors and industries, while others like to evaluate the incremental ideas that we add to the portfolios via transaction alert emails and/or the next idea that registers a 9 or 10 on the Valuentum Buying Index, our stock-selection methodology. This month, we were very pleased to see the valuation thesis on new portfolio addition, Chinese search giant Baidu (BIDU) come to fruition in such a short time. … Read more

Industrial Conglomerates Dominate News on Friday

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The latter part of this week brought about a plethora of news from the ‘Industrial Conglomerates’ industry. On Friday, General Electric (GE) announced a 16% increase to its quarterly dividend to $0.22 per share (a 3.3% annual yield). The industrial behemoth was just added to the portfolio of our Dividend Growth Newsletter October 21 on account of its fantastic Dividend Cushion score and solid third-quarter performance. General Electric’s dividend report will be updated with the new information shortly. Also on Friday, Honeywell (HON) approved an authorization to repurchase up to $5 billion of its common stock, now that the firm’s previous $3 billion share repurchase program approved in 2011 is substantially complete. We encourage Honeywell management to be a bit … Read more

Cisco’s Investor Update Reveals Challenges

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On Thursday, switching and routing giant Cisco (CSCO) hosted its 2013 Financial Analyst Conference, and management’s commentary during the meeting wasn’t encouraging. The firm’s fiscal first quarter 2014 results, released mid-November, had showcased significant order weakness (see here) and commentary on the company’s fiscal first-quarter conference call indicated that the firm did not anticipate material improvement in its order growth during the second quarter, but CEO John Chambers’ reiteration of his view today that emerging markets remain “extremely challenged,” particularly in Brazil and Russia, has sent shockwaves across much of the networking industry. It appears the market had been building in expectations that some order stabilization would occur at this point during the quarter, and Chambers comments may have mitigated … Read more

Toll Brothers Sees Leveling of Demand But Outlook Remains Strong

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On Tuesday, one of the largest luxury homebuilders in the US, Toll Brothers (TOL) released its results for the fiscal fourth quarter (ended October 31, 2013). Revenue growth and unit delivery expansion were fantastic, up 65% in dollars and 36% in units compared to the prior-year quarter. Net signed contracts of $839 million and 1,163 units rose 23% in dollars and 6% in units compared to last year’s period, while on a per-community basis, the fourth quarter witnessed net signed contracts per community (5.17) that was the highest for any fourth quarter since 2005. Backlog of $2.63 billion and 3,679 units rose 57% in dollars and 43% in units compared to the year-ago mark. The average price of homes delivered … Read more