Member Articles

A Great Couple Months! Apple Pops!

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Image shown: The markets continue to rally significantly since the near-term bottom in December. Here’s the email we sent to members December 26.  No changes to simulated newsletter portfolios. By Brian Nelson, CFA Hope you are doing great. Believe it or not, the wind chill may have hit 50 or 60 below-zero in Woodstock, Illinois this morning. The polar vortex has most of the Midwest running for cover. Even the Chicago Bears have changed their name to the Chicago Polar Bears. Just kidding. In any case, the markets don’t mind. We continue to recover from the December lows, and we’ve been staying mighty busy. For starters, if you haven’t read Value Trap: Theory of Universal Valuation, you’re not going to get as … Read more

Novartis Closes Out Busy Year; Proposes Dividend Hike

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Image Source: Novartis fourth quarter presentation European pharmaceutical giant Novartis had a busy year in 2018 on its quest to renew its focus on medicines, and management is excited about its future growth trajectory. We continue to like its free cash flow generation and dividend growth potential. By Kris Rosemann 2018 was a busy year for simulated Dividend Growth Newsletter idea Novartis (NVS), which reported fourth quarter results January 30. The company completed a strategic review resulting in the planned first half 2019 spin-off of its Alcon division, it agreed to sell its Sandoz US oral solids and dermatology portfolio, it sold its stake in the GlaxoSmithKline (GSK) consumer healthcare joint venture for $13 billion, and it invested in long-term … Read more

Apple’s Services Growth on Track; Weakness to Persist in China

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Image Source: William Hook Apple delivered fiscal first quarter results after the close January 29 that were largely in-line with recently adjusted expectations. China has been and will likely continue to be a soft spot, but the company’s Services revenue continues to impress. Strong free cash flow generation and balance sheet health are synonymous with the company. By Kris Rosemann Apple (AAPL) reported fiscal 2019 first quarter reports after the close January 29, but the market already had a good idea of what to expect due to a January 2 update from CEO Tim Cook that included a stark warning on the current demand environment in China (FXI, MCHI). Here’s some of what Valuentum’s President of Investment Research Brian Nelson … Read more

Caterpillar Crushed by Expectations for No Growth in China

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Image Source: Mining.com Heavy equipment giant Caterpillar saw its share price drop significantly following its fourth quarter report January 28 as it reported disappointing bottom-line results for the quarter and announced expectations for softness in China. By Kris Rosemann Concerns regarding macroeconomic uncertainty and the impact of the ongoing trade dispute between the US and China have dominated headlines of late, and these areas, as expressed through notable company outlooks, will remain in focus throughout this earnings season. Caterpillar’s (CAT) fourth quarter report, released January 28, was no exception as its comment on the recent demand environment and forward-looking expectations were closely dissected. The market was significantly disappointed with what it found, particularly as it relates to the company’s operating … Read more

Today’s Recorded Website Walk Through

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  No changes to simulated newsletter portfolios. By Brian Nelson, CFA Hi everyone, Today was busy.  A stock we have stayed far away from, NVIDIA Corp (NVDA) tumbled aggressively today, down nearly 14%. Shares of the equity are starting to bump against the low end of our fair value estimate range, but we expect a downward revision in the coming days. When it comes to semiconductors, we continue to prefer Xilinx (XLNX) and Intel (INTC). My colleague Kris Rosemann wrote up Intel’s recent quarterly report, released January 24, and you can find that write-up here (login required). Caterpillar (CAT) also released a doozy of a fourth-quarter report today, with shares trading off more than 9%. We don’t include any direct metals and mining … Read more

Intel Disappoints with 2019 Guidance; Sell-off Overdone

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Image shown: Intel’s revenue mix continues to shift towards its data-centric businesses and away from its PC-centric business. Source: Intel fourth quarter presentation Simulated newsletter portfolio idea Intel disappointed with its fourth quarter 2018 results and guidance for 2019 as multiple headwinds are expected to persist in the near term. Nevertheless, we don’t think the sell-off was entirely justified as the company continues to position itself to take advantage of the high-growth potential of its data-centric businesses. By Kris Rosemann Shares of simulated newsletter portfolio idea Intel (INTC) faced material selling pressure following the release of its 2018 fourth quarter results and 2019 guidance, released January 25, but we’re not convinced the sell-off was justified. Our fair value estimate for … Read more

Brian Nelson – Author – Value Trap – Valuentum

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READ: PRAISE FOR VALUE TRAP: THEORY OF UNIVERSAL VALUATION ———- Wall Street doesn’t know it has a problem. Index and quantitative investors have been free-riding on the backs of active managers for years, but growth in price-agnostic trading may finally have reached the tipping point. Brian Nelson, former Director of Methodology at Morningstar and President of Investment Research at Valuentum, explains how enterprise valuation forms the Theory of Universal Valuation and why a focus on it may not only help you avoid value traps, but also save you from the next financial crisis. This is a 356 page book, including Preface, Notes, Bibliography and Index. Download the electronic sell sheet here (pdf). The text is a response to many worrisome trends … Read more

Xilinx Rides Momentum to Impressive Free Cash Flow Generation

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Image Source: Xilinx Analyst Day presentation Recent addition to the simulated Dividend Growth Newsletter portfolio Xilinx continues to impress with its robust free cash flow generating capacity, and the company is taking advantage of momentum in key end markets as its top-line growth has been nothing short of impressive. By Kris Rosemann Shares of recent addition to the simulated Dividend Growth Newsletter portfolio Xilinx (XLNX) soared after it surpassed market expectations in its fiscal third quarter and provided compelling upside guidance for its final quarter of fiscal 2019. The company continues to be a tremendous example of free cash flow efficiency, and we think it makes up for its relatively small dividend yield with its robust dividend growth potential. Shares … Read more

Our Report on the Regional Banks and Asset Management Stocks

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Image Source: Carlssa Rogers Structure of the Regional Banks/Asset Management Industry The regional banking and asset management industry is based almost entirely on the confidence of intermediaries and counterparties that make up the building blocks of the financial system. An investment in a bank or asset management firm must come with the acknowledgement of the distinct possibility that another financial crisis may occur at an unknown time in the future. Though we don’t expect one anytime soon given the recent favorable stress-test results of the largest US banks, it’s worth noting that there have been three significant banking crises during the past three decades alone: the savings and loan crisis of the late 1980s/early 1990s; the fall of Long-Term Capital … Read more