Member Articles

Procter & Gamble Remains a Great Free Cash Flow Generator

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Image Shown: Shares of Procter & Gamble Co have started to shift back down towards the top end of our fair value estimate which sits at $120 per share of PG. In our view, investors have begun to factor in expectations that the firm’s growth rate of late will be incredibly hard to sustain over the coming years. Procter & Gamble is a solid company with great free cash flow generating abilities, but the run up in its share price during the second half of the 2020 calendar year was a tad overdone, in our view. By Callum Turcan On January 20, Procter & Gamble Co (PG) reported solid earnings for the second quarter of fiscal 2021 (period ended December … Read more

ALERT: Bull Raids, Short Squeezes and Highly Unusual Market Activity

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We are putting short investors on high alert! By Brian Nelson, CFA In late 2018, Valuentum published Value Trap, a book that warned to all that would heed its warning that a collapse in the traditional quant value factor was coming and that excessive volatility in the markets caused by price-agnostic trading–or those that aren’t paying attention to fair value estimate calculations–would only build and build to eventually reach extreme and irrational levels. The book, while hugely successful winning award after award, was largely ignored by the media, despite our best efforts to get the word out. Now, the chickens are coming home to roost. Image Shown: The book Value Trap warned about the impending collapse of the value factor, … Read more

Following Up on Leading Semiconductor Equipment Supplier ASML Holding N.V.

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Image Source: ASML Holding NV – Fourth Quarter and Full-Year 2020 Earnings IR Presentation By Callum Turcan Shares of Netherlands-based ASML Holding NV (ASML), which supplies lithography systems and services to the semiconductor industry, have done incredibly well since we published our ASML Holding Is an Impressive Enterprise with a Pristine Balance Sheet and Rock-Solid Growth Trajectory article back on April 8, 2020 (link here). From April 8 to January 22, shares of ASML more than doubled. We strongly encourage members that have not done so to check out that article, as we laid out how ASML Holding’s lithography systems are an essential part of the semiconductor industry along with our reasoning behind why we view the company’s long-term outlook … Read more

IBM Is Still A Disappointment

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We’ve never liked IBM. The company has all the attributes of a stock that we’d prefer to stay as far away from as possible. By Brian Nelson, CFA We received a few questions regarding IBM (IBM) from members, and we wanted to make this brief post. Prior to the company’s fourth-quarter 2020 results, released January 22, shares had a price-to-fair value (P/FV) ratio of 0.96 (1=fairly valued), and they were not included in either the Best Ideas Newsletter portfolio, or the Dividend Growth Newsletter portfolio, or the High Yield Dividend Newsletter portfolio. This means that we have very little interest in the company, and our interest continues to be minimal. You can read our take on the firm’s track record in Value … Read more

We Expect Netflix to Turn Into a Free Cash Flow Generating Machine

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Image Shown: Netflix Inc’s global paid subscriber base is expected to keep growing at a decent clip going forward, though at a slower pace than in the recent past. Image Source: Netflix Inc – Shareholder Letter covering its fourth quarter and full-year earnings in 2020 By Callum Turcan The proliferation of video streaming services during the past decade accelerated in 2020 due to the coronavirus (‘COVID-19’) pandemic forcing households to stay indoors, which in turn drove up demand for economical forms of at-home entertainment. During the early days of the video streaming services industry, subscriber growth was driven largely by the “cord cutting” trend in which households traded out more expensive cable/satellite TV packages (sometimes referred to as “premium” TV … Read more

UnitedHealth Group Is a Rock-Solid Dividend Growth Opportunity

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Image Shown: Shares of UnitedHealth Group Inc, which we added to our Dividend Growth Newsletter portfolio back on November 27, continue to climb higher. The top end of our fair value estimate for UnitedHealth Group sits at $401 per share. By Callum Turcan On January 20, UnitedHealth Group (UNH) issued fourth quarter and full-year results for 2020 that beat both consensus top- and bottom-line estimates. The health care giant reported a 6% annual increase in its GAAP revenues in 2020, with its ‘Premiums,’ ‘Products’ and ‘Services’ sales all reporting meaningful increases. Its GAAP earnings from operations grew by 14% annually in 2020, though we caution there is some noise due to the deferral of certain medical procedures, a result of … Read more

ICYMI: Valuentum’s Brian Nelson on the Latest Howard Marks’ Memo: “Something of Value”

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Valuentum’s President of Investment Research Brian Michael Nelson, CFA, explains why there are not really value and growth stocks, why most of the research in quantitative finance is spurious and needs to be redefined on a forward-looking basis, and why enterprise valuation (not the efficient markets hypothesis) should be the organizing principle of finance. Nelson explains his views about valuation, what it means to be a value investor, and investing in the context of Oaktree Capital Howard Marks’ latest memo, “Something of Value,” January 11, 2021. Please don’t forget to give the second edition of the book “Value Trap” a 5-star rating on Amazon here. Thank you for your membership! —– Tickerized for holdings in the IWM. Valuentum members have … Read more

Chipotle, Domino’s Continue to Deliver for Shareholders

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Image Shown: Domino’s Pizza Inc aims to grow its market share in the US by leaning heavily on its delivery and digital operations, a realm the firm has significant competitive advantages in, as compared to leaning on carryout operations at physical stores. Image Source: Domino’s Pizza Inc – January 2021 IR Presentation By Callum Turcan In the restaurant industry, one thing the coronavirus (‘COVID-19’) pandemic has made clear is that having drive thru operations, a strong online presence and efficient delivery services will be key to meeting consumer demand going forward. Physical restaurant locations that rely on indoor dinning will become relevant once again when the pandemic is contained, something the ongoing distribution of COVID-19 vaccines should help accomplish, but … Read more

Walgreens Begins to Recover

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Image Shown: Shares of Walgreens Boots Alliance Inc are beginning to recover. By Callum Turcan Shares of Walgreens Boots Alliance Inc (WBA) are on the rise after the company recently posted a solid earnings report while also reaching a big divestment deal. As we recently covered, Walgreens is divesting most of its European-focused wholesale pharmaceutical distribution business to AmerisourceBergen (ABC) and that article can be viewed here. Please note Walgreens has a material strategic stake in AmerisourceBergen’s equity which will grow in terms of total shares once the divestment closes. Here is a brief excerpt from that article: On January 6, Walgreens Boots Alliance Inc announced it had reached a deal with AmerisourceBergen Corporation (ABC) to sell the “the majority of” … Read more

Steris Ties the Knot with Cantel Medical

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Image Shown: Cantel Medical Corp is getting bought out by Steris PLC through a cash-and-stock deal. The image up above highlights Cantel Medical’s promising long-term growth outlook, though its performance in 2020 was subdued due to headwinds created by the coronavirus (‘COVID-19’) pandemic. In our view, Steris was attracted to Cantel Medical’s improving outlook (the latter started to stage an impressive rebound in the second half of calendar year 2020) and the ability for the combined firm to generate substantial synergies. Image Source: Cantel Medical Corp – December 2020 IR Presentation By Callum Turcan On December 2, we highlighted (link here) the ongoing turnaround at Cantel Medical Corp (CMD) and noted that “we (thought) Cantel Medical is one for the … Read more