Member Articles

Market Overreacts to Oracle’s Cloud Outlook

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Image Shown: The performance of Oracle since the March 2009 bottom. By Brian Nelson, CFA On March 19, Oracle (ORCL) reported in-line fiscal third-quarter results that showed revenue advancing 6.1%, operating income increasing 15.2%, and net income before income taxes jumping 22.3%. The quarter was impacted by a large one-time impact from the U.S. 2017 Tax Cuts and Jobs Act, making year-over-year comparisons on an after-tax basis less meaningful. The company’s fiscal third-quarter non-GAAP earnings per share number of $0.83 translates to 20% growth, and thus far during the fiscal year, non-GAAP earnings-per-share has advanced 16%. Oracle continues to execute well on its growth initiatives. However, the market was looking for a bit more with its outlook, as shares were … Read more

Market Overreacts to Facebook News

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Image Source: Christopher The headline news seems concerning, but we’re taking a long-term perspective with Facebook. We doubt the news will meaningfully impact the trajectory of growth of its long-term free cash flow, and we’re not reading too much into events that seem heavily-influenced by the overheated political environment. By Brian Nelson, CFA Investors are overreacting and selling shares of Facebook (FB) March 19 because they are worried about implications of a UK probe and a state investigation into the practices of Cambridge Analytica, a privately-held data mining and analysis company, and whether the way Cambridge Analytica acquired and applied data from users of Facebook was legal. The New York Times first broke the story when the paper published a … Read more

Saying Good Bye to Boeing…For Now

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There probably hasn’t been a better large-cap call than Boeing in the Dow Jones Industrial Average during the past couple years, and we have been all over it. But shares have now “rolled over,” and its valuation isn’t as attractive as it once was, both dynamics pointing to reasons for removal from the simulated Dividend Growth Newsletter portfolio. We continue to peruse our coverage universe for an adequate dividend growth replacement. By Brian Nelson, CFA I’ve said this time and time again. Valuentum is low turnover, not high turnover like momentum. We think too-much trading results in excessive commission fees and tax implications. We don’t make many moves in the simulated newsletter portfolios, but sometimes we do make changes. On … Read more

Dividend Increases/Decreases for the Week Ending March 16

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Below we provide a list of firms that raised their dividends during the week ending March 16. 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 $0.13 per share quarterly dividend, was $0.12. American Vanguard (AVD): now $0.02 per share quarterly dividend, was $0.015. Atlantica Yield (AY): now $0.31 per share quarterly dividend, was $0.29. BRT Apartments (BRT): now $0.20 per share quarterly dividend, was $0.18. Canterbury Park (CPHC): now $0.07 per share quarterly dividend, was $0.06. CareTrust REIT (CTRE): now $0.205 per share quarterly dividend, was $0.185. … Read more

Dollar General: A Model of Consistency

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Dollar General’s fiscal 2017 marked its 28th consecutive year of positive same-store sales growth, and we couldn’t be more impressed with the consistency of its operational performance in the past three decades, as well as its share price performance since its addition to the simulated Best Ideas Newsletter portfolio. By Kris Rosemann Dollar General’s (DG) fiscal 2017 fourth quarter report, released before the open March 15, was full of reasons for investors to get excited, and its share price reacted accordingly. The company has been a model of consistency for nearly three decades, and it continues to have a significant runway for growth while simultaneously generating an attractive and growing free cash flow stream. Same-store sales grew 3.3% in the … Read more

Nearly 60 Distribution Cuts Later, We Maintain Our View on the Hazards of the MLP Business Model

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Image Source: Brian Cantoni Valuentum has been highlighting the inherent risks associated with the master limited partnership (MLP) structure for some time now, but we are not alone in acknowledging the limited sustainability of such structures. Internal simplification transactions may only become more common moving forward as management teams seek to optimize the structure of their entities. Readers should continue to cast a skeptical eye on this business model. By Kris Rosemann and Brian Nelson, CFA Quite possibly, Valuentum made the “call of the century” when it outlined its warning on MLPs in June 2015, embedded in its Kinder Morgan (KMI) “call,” and more explicitly in September 2015, “Why the MLP Business Model May Be a Goner.” There was a … Read more

Cigna, Express, and the Unwinding of the PBM Market

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Given its track record of creative destruction, when Amazon plans to enter a particular line of business, it presents an ominous threat to incumbents. What is often overlooked, too, is that Amazon is more than willing to try new verticals—if they prove promising, additional assets will be devoted to the new line of business, often with fawning media coverage. If Amazon is unsuccessful in its endeavor, however, then it seems as though it will “fail fast” and shut down the project and move on. We found the recent announcement of a joint venture to tackle the healthcare industry as particularly noteworthy. By Alexander J. Poulos Amazon as the Great Disrupter We have marveled at Amazon’s (AMZN) rumored ambition into pharmaceutical … Read more

Our Ideas Are Performing Awesome So Far in 2018!!! 6 of the Top 7 of the Dow!

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By Brian Nelson, CFA Every day we think about how we can make things easier for our members. Instead of having to visit multiple links on our website with screens, you now have access to one downloadable Excel file where you can sort and rank how you wish. Of course, you can always find those screens in the newsletters, each and every month, too, but we think a weekly data download is a huge value add to our offering. Can you imagine getting updated data every week for 52 weeks of the year for what we charge, let alone two newsletters, hundreds of reports, commentary, and education material? Wow, right? People keep saying we do too much, but when our … Read more

The “Luck” and “Randomness” of Index Funds

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Please select the image below to download the document. Image shown, page 1 of 14. Tickerized for Valuentum’s coverage universe.

Toys ‘R’ Us Liquidation News Transient to Toy Makers

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Image Source: Hasbro Another icon from past decades announced that it may have to liquidate. Though we expect the toy makers to experience a transient impact, we don’t expect it to be lasting. Digital entertainment licensing remains a faster-growing, higher-margin business for them than physical toy sales, and we expect the focus for many toy makers going forward will be on the former, particularly given Disney’s Frozen success. By Brian Nelson, CFA There’s nothing like the announcement of a customer’s possible liquidation to send shares of suppliers tumbling. That’s what happened when Toys ‘R’ Us announced that it may have to cease operations as nobody appears to be coming to the rescue. Hasbro (HAS), Mattel (MAT), and JAKKS Pacific (JAKK) … Read more