Member Articles

Member Question: Reaves Utility Income Fund

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Image Source: Reaves Utility Income Fund, April 30 Question: Have you ever looked at Reaves Utility Income Fund (UTG)? The fund is a utility fund that uses a little bit (20%) of leverage. I have owned them for a long time and have made a good return, but I wonder going forward if I should keep them in my portfolio? Utilities are popular right now, but popularity worries me. Answer: For starters, as is the case for financial publishers such as Valuentum, we can’t provide any personal advice, as we’re not aware of your personal goals and risk tolerances. Please always contact your personal financial advisor regarding any investment decision. With that said, according to Reaves’ website, “the Reaves Utility … Read more

Dividend Growth Newsletter Portfolio Holding Realty Income Keeps Chugging Along

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Image Shown: Shares of Realty Income Corporation have performed quite well over the past year, keeping recent headwinds in mind. By Callum Turcan Dividend Growth Newsletter portfolio holding Realty Income Corp (O) posted a modest increase in its adjusted funds from operations (‘AFFO’) on a per share during its third quarter 2019 earnings report published November 4. Billing itself as “The Monthly Dividend Company” with a ~3.5% yield as of this writing, this REIT has paid out over 590 consecutive monthly dividends during its 50-year long operating history and has increased its per-share payout over 100 times since going public in 1994. We caution that shares of O will continue to experience volatility as expectations of future interest rates are … Read more

Nucor Is One of the Best in a Bad Business

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Image Source: Nucor Corporation – June 2019 IR Presentation By Callum Turcan Steel and steel product producer Nucor Corporation (NUE) bills itself as North America’s largest recycler, using scrap metal at its mills in the US to maintain its status as a low cost producer of anything from steel beams to precision castings. The company has 25-scrap based steel mills that can produce 27 million tons of steel per year. Our fair value estimate for Nucor stands at $53 per share after our recent industry update, and we like the firm’s dividend coverage as well. Shares of NUE yield 2.8% and trade just north of our fair value estimate as of this writing. Strong Free Cash Flows On October 22, … Read more

Procter & Gamble Appears Overvalued

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Image Shown: Shares of Procter & Gamble have been on an epic run since mid-2018, and we think shares have gotten ahead of themselves here. By Callum Turcan Consumer staples giant Procter & Gamble (PG) is a solid company that generates sizable and consistent free cash flows. However, in our view, shares of PG have gotten way ahead of themselves due to a “flight to quality” that has seen the market bid up P&G’s share price from the low $70s in April 2018 to almost $120 as of this writing. Shares of PG now yield 2.5% as of this writing and trade well above the top end of our fair value estimate range of $101 per share. Please note P&G … Read more

High Yield Dividend Newsletter Portfolio Holding Magellan Midstream Keeps Growing

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Image Shown: Magellan Midstream is focusing heavily on growing its fee-based operations, with an eye towards expanding its refined products pipeline segment. Image Source: Magellan Midstream Partners L.P. – August 2019 IR Presentation If you may wish to add the High Yield Dividend Newsletter to your membership, please click here. By Callum Turcan On October 31, Magellan Midstream Partners L.P. (MMP) — 6.6% yield — reported third quarter 2019 earnings. Its quarterly GAAP operating income climbed 8% year-over-year due to a combination of top-line growth (GAAP revenues up 3% year-over-year) and lower operating expenses (GAAP operating expenses down 3% year-over-year). Cost reductions were largely a function of reduced cost of products sales, meaning Magellan Midstream’s marketing division had a decent quarter … Read more

Our Reports on Stocks in the Media Entertainment Industry

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Structure of the Media (entertainment) Industry The media (entertainment) industry spans firms with diversified worldwide entertainment operations to those that specialize primarily in motion picture production and technologies. Firms with media network businesses compete for viewers with other networks, while companies with studio entertainment businesses compete with all forms of entertainment. A significant number of companies produce theatrical/television films, and success depends on unpredictable public preferences. The strongest participants will consistently create filmed entertainment and/or cable programming that consumers want. We’re neutral on the group. For our coverage of firms in the Media (entertainment) industry, please click here.

Top Best Ideas Newsletter Portfolio Holding Berkshire Hathaway Reports Solid Third Quarter Performance

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Image Shown: Shares of Berkshire Hathaway Inc moved higher on Monday November 4 after reporting a decent third quarter 2019 earnings report on Saturday November 2. By Callum Turcan Berkshire Hathaway Inc (BRK.A) (BRK.B) reported solid third quarter 2019 earnings on November 2, and we continue to like Berkshire Hathaway Class B shares as a top holding in our Best Ideas Newsletter portfolio. Our fair value estimate for BRK.B stands at $229 per share with room for upside, as the top end of our fair value estimate range sits at $275 per share. Third Quarter Overview We would like to highlight up front that Berkshire Hathaway’s underlying financial performance improved from the third quarter of 2018 to the same quarter … Read more

Our Reports on Stocks in the Media (CATV) Industry

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Image Source: Mike Mozart Structure of the Media (CATV) Industry The media (cable TV) industry generates revenue primarily from monthly subscription fees and by selling advertising time. Participants provide video, Internet and voice services, operate cable networks, and may also manage other entertainment businesses. Though barriers to entry are high, firms face competition from a broad range of companies and ongoing threats from higher programming/content costs. The strong, recurring cash flow stream that large subscriber bases provide is quite attractive, but more recently a secular trend towards cord cutting and increased competition from Internet-based entertainment distribution services has impacted subscriber numbers. Still, we’re neutral on the group. We’ve modified our coverage of stocks in the Media (CATV) Industry.

Tesla Moves Higher

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Image Shown: Tesla Inc saw its share price jump up after reporting solid third quarter earnings in late-October. By Callum Turcan On October 23, Tesla Inc (TSLA) posted third quarter 2019 earnings that were positively received by the market. Shares of TSLA moved up sharply higher on the news, and our fair value estimate remains at $259 per share of Tesla. We appreciate the automaker’s drive to eventually become consistently free cash flow positive but given the huge range in its estimated fair value (a product of the firm’s high operating leverage and the nascent nature of the mass market electric vehicle industry), we prefer other investment opportunities out there. Additionally, the top end of our fair value estimate range … Read more

Our Reports on Stocks in the Steel Industry

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Image Source: Irene Grassi Structure of the Steel Industry Firms in the steel industry face strong international competition, especially from China, which can often produce steel at rock-bottom prices thanks to lower-cost operations and structural advantages. Steel producers operate at the whim of the prices of volatile raw materials used in production, namely iron ore, coal, natural gas and scrap. Products are sold on the spot market, while other shipments can often be sold under agreements that do not allow for recovery of changes in input costs. Labor unions and the threat of structural overcapacity add more uncertainty. We think the industry structure is very poor. We’ve dropped coverage of stocks in the Steel industry.