Brian Nelson

Nike’s Weak Earnings Growth, Markdowns, and Lofty Inventory Levels Still Telling of a Struggling Consumer

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  Image Source: Valuentum By Brian Nelson, CFA The health of the consumer continues to be one of the biggest questions heading into 2023. Many consumers are working through the excess savings garnered via COVID-19 stimulus (and many market observers expect this savings to run out by mid-2023) and credit card debt is on the rise. Inflation is taking a bite out of consumer discretionary spending as more and more of consumer financial capacity is being allocated to necessities including food and grocery items. Food at home costs have soared, and many have had to cut back in other areas. Nike’s (NKE) second-quarter fiscal 2023 results, released December 20, showed a very discerning consumer that is looking to drive a … Read more

Our Reports on the Real Estate Investment Trusts (REITs)

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Dividend Yield: Estimated on a forward-looking annualized basis. VBI: The Valuentum Buying Index, a timeliness indicator that overlays a price-to-fair-value estimate consideration. Fair Value Estimate: Derived by Valuentum’s enterprise valuation process. Dividend Cushion ratio: A ratio assessing the health of the dividend (the higher, the better). Data as of the date of this article. Individual company reports may have been updated subsequent to the publishing of this article, so please download a company’s stock and dividend report for its latest information and data. Note: The data in the tables of each of the below companies’ respective stock pages is updated the weekend after the publishing of this update. Please click on a company name below to view the corresponding equity … Read more

Stock Market Locked in Technical Downtrend; Millionaires Expect More Pain in 2023

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Image: The stock market has been locked in a downtrend through all of 2022, and the latest bull trap has spoiled the Santa Claus rally. 2023 may be an equally rough year. By Brian Nelson, CFA This market just doesn’t want to go higher in the near term, and the latest bull trap wasn’t encouraging at all. We think long term investors should stay the course, but it is looking more and more like we won’t see a stock market bottom until sometime in 2023. Santa brought coal this year. The false breakout of the downtrend on December 13 was very telling. Just when investors thought the markets just might be headed for a strong Santa Claus rally and a … Read more

Waste Management’s Free Cash Flow Facing Pressure from Sustainability Initiatives

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Image Source: Valuentum By Brian Nelson, CFA We’re huge fans of the environmental services industry. Solid waste simply must be disposed of somewhere in good times or bad times, and garbage haulers operate within an attractive oligopoly when it comes to disposal capacity (i.e. transfer stations, disposal facilities). Many players offer attractive dividend yields to boot. We include Republic Services (RSG) as an idea in our simulated newsletter portfolios, but Waste Management (WM) is yet another consideration. On December 8, Waste Management announced that its board gave the thumbs up for a 7.7% increase in its quarterly payout for 2023, to $0.70 per share. The hike to $2.80 per share on an annual basis implies a forward estimated dividend yield … Read more

Union Pacific Outperforming North American Rail Traffic Trends But Facing Inefficiencies and Inflation Hurdles

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Image Source: Chuckcars By Brian Nelson, CFA On November 30, the Association of American Railroads reported that North American rail traffic is down 1.9% on a year-to-date basis through November 26. Carloads of chemicals, coal, motor vehicles and parts, nonmetallic minerals, and petroleum products were strong, but weakness in farm products, forest products, grain, and metallic ores and metals weighed on overall strength. Rail remains among the most economical way to ship goods over long distances. The railroads were front and center in the news recently about a potential work stoppage over the issue of paid sick leave. President Joe Biden, however, was able to put an end to the potential for a strike by signing “into law a joint … Read more

Moderna’s Personalized Cancer Vaccine (PCV) Could Be a Game-Changer When Combined with Merck’s KEYTRUDA

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Image: Moderna’s therapeutics pipeline continues to advance, and the company recently received positive news regarding its personalized cancer vaccine (PCV), ID # mRNA-4157, when combined with Merck’s KEYTRUDA. Image Source: Moderna By Brian Nelson, CFA Modern medicine continues to advance. Our favorite idea in biotech remains Vertex Pharma (VRTX), which has a fantastic and commercialized cystic fibrosis portfolio and exposure to CRISPR technology, but the latest data to turn our heads came from Moderna’s (MRNA) personalized cancer vaccine (PCV). Investors perhaps are most familiar with Moderna in part because it has produced one of four authorized COVID-19 vaccines available for use in the US: Pfizer (PFE)-BioNTech’s (BNTX), Novavax’s (NVAX), Johnson & Johnson’s (JNJ) and Moderna’s. The PFE-BNTX and MRNA vaccines … Read more

Oracle Puts Up Huge Revenue Growth Number in Second Quarter Fiscal 2023 Results

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Image: Trailing four-quarter free cash flow trends at Oracle are strong but lumpy. Image Source: Oracle By Valuentum Analysts On December 12, Oracle Corporation (ORCL) reported better than expected second quarter fiscal 2023 results for the three months ended November 30. Total revenue advanced 18% in the quarter on a year-over-year basis, leaping 25% in constant currency, thanks in part to strong performance at its infrastructure and application cloud businesses. Non-GAAP operating income increased 5%–and 12% in constant currency–and its non-GAAP operating margin was 41% in the period. Fiscal second-quarter non-GAAP earnings per share of $1.21 beat the consensus estimate, despite foreign currency headwinds. We liked that we saw in the quarterly results, and we’ll be sticking with the company as one of … Read more

American Tower Ups Dividend Payout 6%+ But Shares Not Immune to REIT Sector Weakness

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Image Source: American Tower By Brian Nelson, CFA On December 8, American Tower (AMT) upped its quarterly payout by 6.1%, to $1.56 per share relative to its last sequential dividend issued in October, and now shares yield ~2.9% on a forward estimated basis. Equity REITs have been pummeled in 2022, and AMT has unfortunately failed to buck the trend. Though we like the scale and leverage inherent to cell tower stocks’ business models (which we’ll talk about in this work), we’re taking note of weakening adjusted funds from operations (FFO) and free cash flow trends at AMT, particularly in light of the tower operator’s massive net debt position. Interest rates have been working against REITs during 2022. Image Source: American … Read more

CubeSmart Raises Dividend 14% But We’re Monitoring High Net Debt Load and Deteriorating Occupancy Rates

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Image Source: CubeSmart By Brian Nelson, CFA On December 7, CubeSmart (CUBE) raised its quarterly dividend 14%, to $0.49 per share, which implies a forward estimated dividend yield of ~4.5% at the time of this writing. Though we’ve grown more cautious on REITs the past many months in light of rising interest rates, we include a number of REITs across our newsletter portfolios, and CubeSmart is included in the High Yield Dividend Newsletter portfolio. Image Source: CubeSmart The REIT has economic interests in self-storage properties across roughly two dozen US states and also operates a sizable management platform for self-storage properties owned by third parties. CubeSmart’s owned portfolio (properties it has a direct economic interest in) was comprised of ~610 … Read more

Honeywell’s ESG Efforts May Benefit from More Board Diversity and Moving Beyond Its Asbestos-Saddled Past

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Image: Honeywell continues to put together a long resume of ESG highlights. Image Source: Honeywell’s Environmental, Social and Governance Report By Valuentum Analysts Honeywell International Inc. (HON) has been one of our favorite dividend growth ideas for some time, but the company has also been doing a good job with respect to environmental, social, and governance, commonly referred to as ESG, too. Let’s evaluate Honeywell’s public ESG documents, including CEO Darius Adamczyk’s letter, as we dig into how Honeywell focuses on each one of these dynamics in this note. As it relates to Environmental considerations, the executive team at Honeywell remains committed to becoming carbon neutral by 2035 and is investing quite a bit of capital each year to help … Read more