Member Articles

Lockheed Martin May Be a FCF Cow But the Company Should Consider Debt Reduction Over Share Buybacks

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Image Source: Lockheed Martin By Callum Turcan Known around the world as the manufacturer of F-35 stealth fighters and Blackhawk Helicopters, Lockheed Martin Corporation (LMT) is the world’s leading defense contractor and as of this writing yields a nice 3.0%. While burdened by a significant net debt load, Lockheed Martin has consistently been a free cash flow cow enabling the firm to sport decent dividend coverage. Last year, 70% of Lockheed Martin’s net sales came from the US government, highlighting how domestic annual defense spending levels are very important to the company’s financial performance. Growing Backlog Lockheed Martin’s order backlog stood at $130.5 billion at the end of 2018, up 24% or $25.0 billion from year-end 2017 levels. The company … Read more

Why We’re Staying Away from KLX Energy Services for Now

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Image Source: KLX Energy Services By Callum Turcan KLX Energy Services Holdings Inc (KLXE) is the product of a major corporate restructuring, as the oilfield services side of KLX was spun-off to shareholders while the aerospace business was acquired outright by Boeing Company (BA) in an all-cash deal worth $4.25 billion (including the assumption of $1.0 billion in debt) last year. Going forward, the new KLX Energy Services is focused on providing well completion, well intervention, and drilling services to America’s upstream oil & gas industry. A key consideration is that as a more focused enterprise, KLX Energy Services should be able to better perform in a tough space to be in right now. Note that the company does not … Read more

Our Reports on Stocks in the Major Airlines Industry

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Image Source: Cory Hatchel Structure of the Major Airlines Industry The airline industry has undergone meaningful changes since the beginning of the last decade. The painful restructuring by most of the legacy carriers via Chapter 11, significant consolidation by the majors, the introduction of ancillary revenue streams, and the ongoing efforts to rightsize capacity to slow weakening real yields are but a few. Though unarguably these are steps in the right direction, airlines remain shackled to the very poor structural characteristics of their industry, which has sent more to bankruptcy than any other in our coverage. Airline stocks should be viewed as merely speculative bets. We have dropped coverage of the Major Airlines industry.

DG Newsletter Alert, Markets on a Roll! New Highs Coming?

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Image shown: We notified members December 26 that we had moved the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to a “fully invested” position, from a 30% and 20% cash “weighting” at the high end of the range, respectively. It doesn’t look like the timing could have been much better.  Changes to Dividend Growth Newsletter portfolio Removing Novartis (NVS) -3.5%-5.5% Adding Health Care Select Sector SPDR Fund (XLV) +3.5%-5.5% By Brian Nelson, CFA The back half of 2018 was among the most exciting in Valuentum’s history. For one, we might have made one of our best “market-direction” calls since inception in practically calling the near-term bottom December 26. In hindsight, it’s clear the market had overreacted, but at the time, going to “fully … Read more

Dividend Increases/Decreases for the Week Ending March 15

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Below we provide a list of firms that raised their dividends during the week ending March 15. 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 Acushnet Holdings (GOLF): now $0.14 per share quarterly dividend, was $0.13. Apollo Commercial Real Estate Finance Inc Cum Red Perp Pfd Shs Series C (ARI.PC): now $0.50 per share quarterly dividend, was $0.46. Badger Daylighting (BADFF): now CAD 0.0475 per share monthly dividend, was CAD 0.045. Center State Banks (CSFL): now $0.11 per share quarterly dividend, was $0.10. Citizens Financial Services (CZFS): now $0.445 per share … Read more

Boeing Had Been Overpriced, Breakup Facebook, Amazon, and Alphabet?

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Let’s cover some of the recent developments related to Boeing and ongoing political posturing as it relates to large tech companies. Don’t forget about the 40/40 goal, and be sure to check out the tremendous success rates of the Exclusive publication! By Brian Nelson, CFA The interest in the Exclusive publication has never been greater, and frankly, I couldn’t be happier — and I only have you to thank. But what is the Exclusive and how does it differ from the High Yield Dividend Newsletter? Well, the Exclusive is our premiere newsletter, where we highlight an income idea, a capital appreciation idea and a short idea for consideration each month in thesis form. Many individuals, financial advisors, and institutions use … Read more

Our Reports on Stocks in the Media (Advertising) Industry

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Image Source: Dan Structure of the Media (advertising) Industry The media (advertising) industry spans a variety of firms, including those that operate out-of-home liquid crystal display advertising, companies that engage in magazine publishing, and entities that provide services that enable marketers to sell their products online. National and local media revenues are affected by changes in demand for advertising and overall consumer health, both of which are tied to general economic conditions. Advertisers in China are beholden to significant government regulations, while all participants compete with other mass media, including Internet and television. We don’t like the group. We no longer publish reports on stocks in the Media (advertising industry). For reports on other media stocks: Media: CBS, CETV, GCI, … Read more

Our Reports on Stocks in the Energy Equipment & Services – Offshore Drilling Industry

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Image Source: Michael Elleray Structure of the Energy Services – Offshore Drilling Industry The offshore drilling industry is driven by hydrocarbon demand and spending by oil and gas companies. The group has traditionally been subject to intense price competition and volatility. Periods of high demand and higher day rates are often followed by periods of low demand and lower day rates. Contracts vary in terms and rates depending on the nature of the operation to be performed. An oversupply of drilling rigs in any market area is a key risk to pricing dynamics and underlying profitability. We’re not big fans of the industry structure, though long-term contracts can offer stability to performance. We no longer publish reports on companies in the Energy … Read more

Updated Thoughts on Brighthouse Financial and Quad/Graphics

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Brighthouse Financial is trading at material discount to its book value per share as the market questions its strategy to enhance its return on equity in coming years, and we’re not high on its risk/reward potential as a notable portion of its bottom-line performance is beyond the control of management. Quad/Graphics sports a lofty dividend yield, but we’re less than enthused about its long-term prospects as it looks to consolidation in a declining industry for growth. By Kris Rosemann We’re Not Interested In Brighthouse Despite It Trading at a Discount to Book Image Source: Brighthouse Financial Investor Presentation Hedge fund manager David Einhorn is a big fan of Brighthouse Financial (BHF) thanks in part to its hedging with an options-based … Read more

FB/FIZZ Methodologically Speaking and CMG, AAPL, BA!

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By Brian Nelson, CFA Hi everyone, Hope you are doing great. There a few things I wanted to put on your radar this evening. We’re going to talk the importance of having CFA charterholder research at your advisory practice. We’ll discuss Facebook (FB) and National Beverage (FIZZ) in the context of our methodology, and we’re going to touch on a couple things at Chipotle (CMG), Apple (AAPL) and Boeing (BA). Did you hear about the 737 MAX 8? Not good. I also wanted to remind you of the new 40/40 Goal (click here), of which we are already making progress (the book reviews keep coming in). Thank you! First, just a quick reminder on the 40/40 Goal. We now have 15 reviews … Read more