Member Articles

Mondelez Capturing Share, Generating Strong Free Cash Flow

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Image Source: Mondelez International Inc – November 2020 IR Presentation By Callum Turcan On January 28, snacks giant (generates most of its annual revenues from biscuits, chocolates, gum and candy) Mondelez International Inc (MDLZ) reported fourth quarter earnings for 2020 that beat both consensus top- and bottom-line estimates. Management noted in the earnings press release that the firm “enter[ed] 2021 in a strong position financially and in the marketplace which gives us confidence that we can deliver on our long-term growth targets in 2021 and beyond.” Mondelez reported 3.7% net organic revenue growth in 2020, supported by favorable volume and pricing movements, and negatively impacted by product mix. The firm’s GAAP revenues were up just under 3% year-over-year in 2020, … Read more

Two Industrial Giants on the Rebound

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Image Source: Honeywell International Inc – Fourth Quarter of 2020 IR Earnings Presentation By Callum Turcan Two industrial bellwethers reported fourth quarter earnings for 2020 recently, Caterpillar (CAT) and Honeywell (HON). Industrial companies were hit extremely hard by the coronavirus (‘COVID-19’) pandemic last year due to a myriad of factors from production lines getting shut down to deteriorating end-user demand, though things are starting to improve as global health authorities steadily work towards putting an end to the public health crisis now that vaccine distribution activities are underway. Both industrial firms covered in this note mentioned that they expect their financial and operational performance to improve going forward. Caterpillar (CAT) When Caterpillar Inc reported fourth quarter earnings for 2020 on … Read more

Starbucks Expects to Recover in Fiscal 2021

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By Callum Turcan On January 26, Starbucks Corporation (SBUX) reported first quarter earnings for fiscal 2021 (period ended December 27, 2020) that saw the firm miss consensus top-line estimates but beat consensus bottom-line estimates. The ongoing coronavirus (‘COVID-19’) pandemic has weighed negatively on Starbucks’ performance of late, as its GAAP revenues fell by 5% and its GAAP operating income tanked by 25% on a year-over-year basis last fiscal quarter. Leaning on its digital presence and drive-through operations have helped to a degree, but the reduction in the number of workers commuting worldwide (especially in the US) is clearly taking a toll on its business, as is the decline in vacation and business travel. Shares of SBUX yield ~1.8% as of … Read more

Fourth Quarter Bank Earnings Roundup: MS, GS, BAC, C, WFC, JPM

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Executive Summary: Though we’re generally cautious on banking business models due to the arbitrary nature of cash-flow generation within the banking system and the difficulty in valuing such entities on the basis of a free-cash-flow-to-the firm framework, we like Morgan Stanley–and its return on tangible equity of 17.7% during the fourth quarter of 2020 speaks to solid economic-value creation. Goldman’s annualized return on total equity (ROTE) was an impressive 22.5% during its fourth quarter, helping drive the full-year measure to 11.1% for 2020. Bank of America had been an idea in the Best Ideas Newsletter portfolio in the past, but we removed the company June 11, 2020. We continue to view the banking system more as utility-like serving as an extension … Read more

Apple, Facebook, and Tesla Report Earnings

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Image Shown: Facebook Inc continues to steadily grow its active user base, primarily by leveraging and expanding its international presence. Image Source: Facebook Inc – Fourth Quarter of 2020 Earnings IR Presentation By Callum Turcan In alphabetical order by ticker: AAPL, FB, TSLA We continue to witness unusual trading activity in the markets driven in large part by investors that are apparently communicating with each other over online forums such as Reddit. This trading activity is then being exacerbated by quantitative trend and momentum funds, generating levels of volatility in some names never before seen. On January 27 (link here), we sent out an alert to members noting that we shifted our newsletter portfolios to a 10%-20% cash weighting. Should … Read more

Three Newsletter Portfolio Ideas Post Stellar Earnings Updates: JNJ, LMT, MSFT

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Image Source: Johnson & Johnson – Fourth Quarter of Fiscal 2020 Earnings IR Presentation By Callum Turcan In alphabetic order by ticker: JNJ, LMT, MSFT Three of the newsletter portfolio ideas recently reported stellar earnings updates and provided promising outlooks that we want to draw to our members’ attention. With global health authorities working towards putting an end to the coronavirus (‘COVID-19’) pandemic, aided by ongoing vaccine distribution efforts, the outlook for the global economy is bright and getting brighter. Johnson & Johnson (JNJ) We include healthcare conglomerate Johnson & Johnson (JNJ) in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios. Shares of the company have been on a steep upward climb since early November 2020 as investors … Read more

Earnings Roundup of Three High-Yielding Firms: MMM, RTX, VZ

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Image Source: 3M Company – Fourth Quarter of 2020 Earnings IR Presentation By Callum Turcan In alphabetical order by ticker: MMM, RTX, VZ The coronavirus (‘COVID-19’) pandemic generated substantial headwinds for the global economy in 2020 and for most businesses large and small, save for many firms operating in the IT sector. However, several large industrial and telecommunications companies are reporting that the outlook for 2021 looks quite bright, relatively speaking, as ongoing vaccine distribution efforts indicate the pandemic will be brought to an end sooner than expected. 3M (MMM) — Dividend Yield: ~3.3% The industrial conglomerate 3M Company (MMM) beat both consensus top- and bottom-line estimates when it reported fourth quarter earnings for 2020 on January 26. 3M has … Read more

ALERT: Raising Cash in the Newsletter Portfolios

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January 27, 2021 ALERT: Raising Cash in the Newsletter Portfolios We are raising the cash position in the simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio to 10%-20%. — By Brian Nelson, CFA — Our research has been absolutely fantastic for a long time, but 2020 may have been our best year yet. You can read the 2020 recap here. With the S&P 500 trading within our fair value estimate range of 3,530-3,920 (and the markets rolling over while showing signs of abnormal behavior), we’re raising the cash position in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to 10%-20%. — For more conservative investors, the high end of this range may even be larger, especially … Read more

Fourth Quarter Earnings Reports Coming In: INTC, GGG, KMB, STLD

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Image Source: Kimberly Clark Corporation – Second Quarter of Fiscal 2021 Earnings IR Presentation By Callum Turcan In alphabetical order by ticker: INTC, GGG, KMB, STLD Earnings season is upon us! Over the next few weeks, we should get a better idea of how corporations view the trajectory of the domestic and global economy now that coronavirus (‘COVID-19’) vaccine distribution efforts are well underway. We intend to cover the earnings reports of key companies across a range of industries and sectors in the coming weeks to provide a broad overview of how the economy fared during the end of calendar year 2020 and what to expect going forward. Intel (INTC) For starters, please be aware that we removed Intel Corporation … Read more