Member Articles

German Industrial Conglomerate Siemens Remains an Attractive Income Generation Idea

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Image Shown: Siemens AG sees the global industrial economy staging a recovery from the COVID-19 pandemic, which in turn supports the firm’s outlook. The company raised its full-year guidance when Siemens published its latest earnings report. Image Source: Siemens AG – Second Quarter of Fiscal 2021 IR Earnings Presentation By Callum Turcan The German-based industrial conglomerate Siemens AG (SIEGY) has four core industrial business operating segments that are as follows: Digital Industries (‘DI’), Smart Infrastructure (‘SI’), Mobility (‘MO’), and Siemens Healthineers. Its operations are supported by Siemens Financial Services (‘SFS’) which provides support for its industrial businesses and services to third-parties. Siemens has put up strong underlying operational and financial performance of late and remains an interesting income generation idea. … Read more

Best Idea Disney’s Outlook Is Bright and Getting Brighter

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Image Source: The Walt Disney Company – December 2020 Investor Day Presentation By Callum Turcan On May 13, The Walt Disney Company (DIS) reported second quarter fiscal 2021 earnings (period ended April 3, 2021) that beat consensus bottom-line estimates but missed consensus top-line estimates. Investors were dismayed that the company’s paid video streaming subscriber base did not grow by as much as expected. However, we are not worried as Disney’s outlook is bright and getting brighter. Though the coronavirus (‘COVID-19’) pandemic has weighed negatively on its business, ongoing vaccine distribution efforts are slowly enabling Disney to open its numerous theme park and resort operations back up (historically, these assets were Disney’s cash-flow cows). For instance, Disneyland and Disneyland California Adventure … Read more

Two High-Quality REITs with Promising Outlooks: Digital Realty (DLR) and Realty Income (O)

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  Image Shown: An overview of Digital Realty Trust Inc’s expansive geographical footprint. Image Source: Digital Realty Trust Inc – First Quarter of 2021 IR Earnings Presentation By Callum Turcan The real estate investment trust (‘REIT’) industry is steadily recovering from the coronavirus (‘COVID-19’) pandemic. Generally speaking, rent collection rates are on the rise as vaccine distribution efforts are helping enable the economy to slowly open back up, allowing many commercial activities to resume in earnest. Let’s have a look at the latest earnings reports from two high-quality REITs in this article. Digital Realty (DLR) On April 29, Digital Realty Trust Inc (DLR), a data center REIT, published its first quarter 2021 earnings that beat both consensus top- and bottom-line … Read more

Markets Back on Track – Seeking Net-Cash-Rich, Free Cash Flow Generators with Pricing Power!

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By Brian Nelson, CFA The past few trading sessions have tested the conviction of many equity holders, but we remain focused on the long run and believe the Best Ideas Newsletter portfolio, Dividend Growth Newsletter portfolio, and the High Yield Dividend Newsletter portfolio (available to registered members of that publication) are well positioned for long-term capital appreciation potential, dividend growth potential, and sustainable high yield dividend income, respectively. During the trading session May 13, the Best Ideas Newsletter portfolio was led by some of our favorite net-cash-rich, free-cash-flow powerhouses. Moving convincingly higher, Apple (AAPL), Cisco (CSCO) and Microsoft (MSFT) have strong net cash positions on the balance sheet and generate impressive free cash flow well in excess of expected cash … Read more

Stock Markets Still Healthy, Big Cap Tech and Large Cap Growth Safe Havens

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Image Shown: The S&P 500 has been trading above our fair value estimate range (shaded blue area) for some time now. A modest sell-off should be expected. We continue to be bullish on equities for the long run and point to the areas of big cap tech and large cap growth as sources of fundamental and financial resiliency. By Brian Nelson, CFA The S&P 500 (SPY), chart shown above, is trading above our fair value estimate range. The recent sell-off should not be surprising, and it has been predominant in speculative free-cash-flow burning technology stocks, of which we tend to avoid. In January of this year, we “raised” 10%-20% cash in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter … Read more

Inflation! How to Think About Value Duration

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By Brian Nelson, CFA Investors continue to focus on the prospects of rising inflation expectations, which are impacting Treasury bond yields. The 10-year Treasury note, which is used as the foundation for discount rates within most valuation constructs, now stands at ~1.61%, up meaningfully from the ~0.5% lows set in early August 2020. The Fed/Treasury continue to be highly accommodative, and the growing market capitalization of cryptocurrencies is adding even more “new money” to the system. Investors continue to discount the longer-duration free cash flow profiles of the most speculative technology companies more aggressively. For example, the ARK Innovation ETF (ARKK), which is full of speculative tech names, has fallen to ~$105 per share from a 52-week high of $159.70 … Read more

Utility PPL Is Pursuing a Major Transformation and Has a VBI Rating of 9

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Image Source: PPL Corporation – First Quarter of 2021 IR Earnings Presentation By Callum Turcan PPL Corporation (PPL) operates several utilities in the US and the UK, though the company is in the process of selling its UK utility business (Western Power Distribution) to National Grid plc (NGG). When including the assumption of approximately GBP£6.6 billion in debt, this deal has a transaction value of roughly GBP£14.4 billion and is expected to generate about USD$10.2 billion in net cash proceeds for PPL. Additionally, as part of this arrangement, PPL will acquire National Grid’s Rhode Island utility business in the US (Narragansett Electric Company). When including the assumption of approximately USD$1.5 billion in debt, this deal has a total transaction value … Read more

3 Strong Dividend Payers to Consider Within Consumer Staples

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By Brian Nelson, CFA Dividend growth may never go out of style. For one, there are tremendous compounding benefits to investing in dividend growers over the long haul, “3 Substantial Benefits of Dividend Growth Investing.” A focus on traditional cash-based sources of intrinsic value and dividend health is therefore essential to avoid tragic dividend cuts in your portfolio (see our walk-through of the cash-based sources of intrinsic value and how to find them in our article/video about Apple here). Three dividend growers that we do not include in the Dividend Growth Newsletter portfolio but that have recently-reported calendar first-quarter 2021 earnings and may be worth considering in a diversified equity portfolio are Kellogg (K), Colgate-Palmolive (CL) and Clorox (CLX). These three … Read more

PayPal Reports Strongest First Quarter Results in History!

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Image Shown: A snapshot of PayPal’s first-quarter performance. Image Source: PayPal. By Brian Nelson, CFA On May 5, PayPal Holdings (PYPL), which is included as a highly-weighted idea in the Best Ideas Newsletter portfolio, reported fantastic first-quarter 2021 earnings. Revenue grew ~31% on a year-over-year basis in the quarter, helping to drive non-GAAP earnings per share to $1.22, up 84% from the $0.66 registered in the year-ago period. Total payment volume leapt ~50%, and the company added ~14.5 million net new active accounts in the period. PayPal raised its guidance for revenue, earnings, total payment volume and net new active accounts for 2021. Revenue is now expected to advance ~20% at present currency exchange rates, while non-GAAP earnings per share … Read more

Berkshire Hathaway Charging Higher

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Image Shown: Shares of Berkshire Hathaway Inc Class B stock are on a nice upward climb year-to-date, and we include BRK.B as an idea in the Best Ideas Newsletter portfolio. By Callum Turcan On Saturday, May 1, Berkshire Hathaway Inc (BRK.A) (BRK.B) reported first quarter 2021 earnings that impressed, in our view. We include Berkshire Hathaway Class B shares as an idea in the Best Ideas Newsletter portfolio and continue to be big fans of the firm and its management team, led by CEO and Chairman Warren Buffett and Vice Chairman Charlie Munger. Some big news came out recently as it concerns the eventual management transition at Berkshire Hathaway. Reportedly, Greg Abel, who runs Berkshire Hathaway’s non-insurance operations, would take … Read more