Member Articles

Our Reports on Stocks in the Pharmaceuticals (Biotech/Generic) Industry

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Image Source: Open Grid Structure of the Pharmaceuticals Industry The pharma (generic/other) industry is composed of makers of both brand and generic drugs. Intellectual property protection remains vital to the successful commercialization of safe/effective medicines, avoidance of pricing pressures, and offers brand firms competitive advantages over the life of such patents. Firms in the biotechnology industry face no certain future. Drug development is complex, difficult, and risky, and failure rates are high. Competition can be fierce when biosimilar products exist, though patents are material competitive advantages. We like the group, but the timing of expiration of patents should be watched closely. We’ve optimized our health care coverage, the reports of which can be found here.

JPMorgan’s Quarter Shows Higher Sustainable Growth Potential

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“We are raising our fair value estimate of JPMorgan to $160 per share to reflect higher sustainable growth than we’d previously been expecting.” — Matt Warren By Matthew Warren JPMorgan Chase & Co (JPM) reported an impressive set of results, and in fact, a record fourth quarter, with managed net revenue up 9% and net income up 21%, beating on both the top and bottom lines versus analyst consensus estimates. The bank continues to churn out best-in-class return on tangible capital for the money center banks at 17% in the quarter. JPMorgan’s efficiency ratio came in at an impressive 56%, or 55% on an adjusted basis. For a bank with such a sizable i-bank and capital markets business (where efficiency … Read more

Disney Joins the Best Ideas Newsletter Portfolio

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Image Shown: Shares of The Walt Disney Company have performed well over the past year, and we see room for additional upside. By Callum Turcan Media and entertainment giant The Walt Disney Company (DIS) was just added to our Best Ideas Newsletter portfolio (article link here announcing recent portfolio changes). Though the firm does not register the typically high Valuentum Buying Index rating that we would prefer with new additions (sometimes we have to relax criteria to achieve newsletter portfolio goals), we like Disney’s business model and its future free cash flows are underpinned by: a top quality intellectual property (‘IP’) portfolio that’s practically impossible to replace, the immense profitability of its theme parks (which benefit from its strong and ever-growing IP … Read more

ALERTS: Big Changes to the Portfolios; Goodbye Apple!

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Image Source: GDS-Productions Summary Best Ideas Newsletter portfolio Remove: AAPL (7%-12%), GM (2.5%-4%) = 9.5%-16% Add to PYPL (increase weighting by 3%, to the range of 5.5%-7%), add DIS (2.5%-4%), add XAR (4%-5.5%) = 9.5%-14% Dividend Growth Newsletter portfolio Remove: AAPL (5.5%-7.5%), GM (3.5%-5.5%) = 9%-13% Add: BAC (2.5%-3.5%), NEM (2.5%-3.5%), RSG (2.5%-3.5%), LMT (2.5%-3.5%) = 10%-14% —– By Callum Turcan and Brian Nelson, CFA We are making a number of changes to the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio as this market continues full steam ahead. We remain near fully invested in both newsletter portfolios, but we are positioning them more defensively as we enter 2020. The following changes will be reflected in the newsletter portfolios … Read more

Intel Has Performed Well Since Acquiring Mobileye

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Image Shown: Intel Corporation (represented by the blue line in the graph above), a long time holding in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios, has substantially outperformed the NASDAQ 100 (QQQ) index (black line) and the S&P 500 (SPY) index (orange line) since the period just before announcing its ~$15 billion deal to acquire Mobileye in March 2017, before taking dividends into consideration (given that Intel pays out a decent dividend, that wouldn’t change this picture materially). By Callum Turcan Shares of Best Ideas Newsletter and Dividend Growth Newsletter portfolio holding Intel Corporation (INTC) have performed well since announcing back in March 2017 that it was going to acquire Mobileye, a maker of software for the … Read more

Capital Appreciation or Dividend Growth?

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Image source: David Mulder By Brian Nelson, CFA Hope you are doing great! We had one question why we didn’t include an evaluation of the six ideas that were closed in the Dividend Growth Newsletter portfolio during 2019. Of course, these ideas matter, but let’s walk through why. For example, one dividend growth idea that was closed during 2019 was Xilinx (XLNX), with the stock ending 2018 at a close price of $85.17 (it opened 2019 at $83.39) surging to $116.55 by February 14, 2019 (the low on the session of its close date) for a ~37% gain in a very short time (excluding the $0.36/share dividend it paid along the way). Xilinx was a huge winner in the Dividend … Read more

Our Reports on Stocks in the Luxury Goods – Established Brands Industry

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Image Source: Kevin Wu Structure of the Luxury Goods Industry Luxury goods firms differentiate themselves based on brand name, perception, and quality in order to generate excess returns on invested capital through the economic cycle. Building a large, successful luxury brand is difficult, leaving those that possess them with intangible competitive advantages that are not easily overcome by new entrants. Growth in emerging middle classes and China will be the key demand drivers going forward, though the strongest brands will also grow successfully via market share gains. Though changes in consumer preferences should be watched closely, we like the structure of the group. For coverage of firms in the Luxury Goods – Established Brands – Industry, please click here.

Newmont’s Outlook is Bright Due to More Than Just Gold Prices Rallying

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Image Source: Newmont – Third Quarter 2019 Earnings IR Presentation We are in the process of updating our models on Newmont in light of recent events. By Callum Turcan Newmont Corporation (NEM) announced a huge boost to its dividend on January 6, with its quarterly payout growing by 79% to $0.25 per share from $0.14 previously. As of this writing, that’s good for a forward-looking yield of ~2.4%. Additionally, the company reiterated its commitment to buying back its stock now that the merger between Newmont and Goldcorp is firmly in the rear view mirror (Newmont Corporation used to be known as Newmont Goldcorp Corporation, a name that was shortened this year). We continue to like the name as one of … Read more

Our Reports on Stocks in the Semiconductor Equipment Industry

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Image Source: Applied Materials Structure of the Semiconductor Equipment Industry The semiconductor equipment industry is highly competitive and characterized by rapid technological change. Success hinges on the ability to commercialize new technology in a timely manner, continuously enhance products to improve efficiency of customer fab operations, and manage costs and inventory effectively. Performance of constituents is heavily influenced by manufacturing capacity and fab utilization rates, which together create volatile demand cycles. The potential for unexpected shifts in demand for the group’s products leaves us unexcited about the industry’s structural characteristics. We’ve optimized our technology coverage. Reports can be found here.

Dividend Increases/Decreases for the Week Ending January 10

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Below we provide a list of firms that raised their dividends during the week ending January 10. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Atco (ACLTF): now CAD 0.4352 per share quarterly dividend, was CAD 0.4048. B. Riley Financial Series A Cum Ppptl Pref Stk (RILYP): now $0.4297 per share quarterly dividend, was $0.1146. Bridge Bancorp (BDGE): now $0.24 per share quarterly dividend, was $0.23. Canadian Utilities (CDUAF): now CAD 0.4354 per share quarterly dividend, was CAD 0.4227. Clough Global Equity Fund (GLQ): now $0.1104 per share monthly dividend, was … Read more