Member Articles

CVS Health Under Review – Hit by a Storm of Negativity

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Image Source: Mike Mozart We are putting the fair value estimate of CVS Health under review while we re-evaluate the competitive environment and reassess the company’s appetite for leverage, which could impact dividend health. Brian Nelson, CFA Boy has CVS Health (CVS) been hit by a storm of negativity in recent months. After we added it to the newsletter portfolios, the company has gotten caught up in a whirlwind of investor concern regarding Amazon’s (AMZN) probable entrance in the pharmacy market. We noted as much in our September 30 note, “Amazon Casts a Large Shadow Over the Pharmacy Market,” and we said that even we were “growing more and more cautious on shares,” as we pointed to Amazon’s potential acquisition … Read more

Novartis Gearing Up for Growth

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Dividend Growth Newsletter portfolio idea Novartis continues to grow its free cash flow stream while producing a string of products still in the infancy of their respective growth curves. The pharma/biotech realm remains bedeviled with patent issues that can disrupt cash flow generation once protection is lost, causing us to look for companies positioned for a fresh leg of growth. To that end, let’s take a look at Novartis’ pipeline, near-term potential, and how it relates to its dividend health. By Alexander J Poulos Alcon Division In Novartis’ (NVS) third quarter of 2017, results released October 24, its Alcon division posted an impressive constant-currency revenue jump of 7% from the year-ago period and a 23% year-over-year increase in core operating … Read more

Subscribe Now to NEW High Yield Dividend Newsletter! Earnings Reports Rolling In…

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Update: $400/year offer no longer available. ———- You have to read about our NEW High Yield Dividend Newsletter. Let’s cover that, and three key earnings reports that are driving the market to new heights October 27. By Brian Nelson, CFA I am excited about the rapid pace of new subscribers to the NEW High Yield Dividend Newsletter and accompanying simulated high-yield dividend portfolio. On the basis of the current sign-up rate, I don’t think the introductory savings will last much longer than this weekend. Please be sure to look into locking in the savings now. The annual cost of the NEW High Yield Dividend Newsletter is $400/year to the first 100 members (offer no longer available, but you can sign … Read more

Analysis of Aspen Technology (AZPN) and IPG Photonics (IPGP)

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Executive Summary – Aspen Technology helps some of the most capital-intensive industries optimize asset performance via process modeling, big data machine learning, and analytics, and its very own asset-light operations help it generate impressive levels of free cash flow. Shares aren’t cheap, however (it is trading above our fair value estimate range), and current price levels imply one hefty price-to-earnings ratio. Still, it’s hard not to like Aspen Technology’s high-ROIC business model, with the company garnering one of the highest Economic Castle ratings in our coverage. IPG Photonics is home to an impressive portfolio of high-performance fiber lasers and similar technologies that are used in materials processing, advanced communications, and medical applications–areas and applications that are expected to experience strong … Read more

Microsoft’s Stock Now in the Mid-$80s!

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Image Shown: While others said Microsoft’s stock was “dead money,” we were pounding the table on the idea! Microsoft has been one of our favorite dividend growth stocks, one that we have highlighted many a time at presentations explaining the Dividend Cushion ratio. We trust you are benefiting greatly from this fantastic idea! By Brian Nelson, CFA It’s very challenging to hit the proper tone in any note that we write up, especially as we talk about one of our best stock ideas in recent years in the context of a broader stock market, in which the average S&P 500 company is trading at nearly 18 times forward 12-month earnings. What we’re trying to say is that, while we are … Read more

Risky Restaurants? Taking a Look at Chipotle and Domino’s Pizza

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Image Source: Valuentum Chipotle and Domino’s Pizza have very little in common, in our view, but let’s take a look at what has been causing volatility in each company’s stock of late. By Kris Rosemann Burrito giant and once-beloved Chipotle (CMG) continues to attempt to battle back to prominence in the fast-casual restaurant space–an area in which it was once the golden child but now looks to be a prodigal son at best. The burrito-maker’s comeback story experienced a bit of a setback as shares dropped nearly 15% in the trading session October 25 after releasing third quarter 2017 results after the close October 24. Revenue grew nearly 9% in the period on a year-over-year basis in the quarter, restaurant … Read more

Does Visa Ever Disappoint?

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Image Source: Visa The credit card network hit all-time highs today. We continue to be huge fans of the company’s fundamentals. By Brian Nelson, CFA Another day, another new high for top-weighted idea in the Best Ideas Newsletter portfolio, Visa (V). Briefing Investor said it succinctly: Visa…is trading at a new all-time high after the company reported better than expected fourth quarter results and gave encouraging guidance for fiscal 2018… Visa owns a global payment network. Unlike American Express (AXP) and Discover (DFS), which own payment networks and issue credit, Visa doesn’t take any credit risk — Capital One (COF) is a bank that issues a lot of credit cards. Visa is a technology company in the financial sector, just … Read more

Key Oncology Assets Powering Johnson & Johnson Higher

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Image Source: JNJ third quarter earnings presentation Shares of newsletter portfolio holding Johnson & Johnson continue their stellar run, posting new all-time highs on the heels of an impressive third quarter earnings report. Let’s take an in-depth review of key pharma product franchises as they relate to the performance of the stock. By Alexander J. Poulos and Kris Rosemann Immunology Johnson & Johnson’s (JNJ) largest pharmaceutical division remains Immunology–an area where the company continues to be a pioneer–but the division has begun to feel the strain of the coming biosimilar onslaught as its legacy molecule Remicade continues to cede ground to biosimilar competition. The drug posted a 7.6% year-over-year revenue decline in the third quarter of 2017 to ~$1.65 billion … Read more

Analysis of Marcus Corp (MCS) and Schneider National Trucking (SNDR)

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Image Source: Dan Executive Summary – Marcus Corp has done well in establishing itself as a meaningful regional player in the movie theater market, and its ability to outperform the industry in terms of box office results and profitability in its movie theater operations–thanks in part to its solid portfolio of owned real estate–is impressive. However, inconsistent free cash flow generation and a notable debt load give us some reason for pause, as does its weak Dividend Cushion ratio, and we see little valuation opportunity present in shares at this time. Schneider National Trucking operates a broad portfolio of freight transportation and logistics solutions that appear to be positioned well for profitable growth thanks to a diversified customer base, the … Read more

Kinder Morgan Versus Enterprise Products Partners?

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Image Source: Stefan Buddy  Question: Valuentum’s latest note on Kinder Morgan (KMI) hinted the company’s situation is improving, even though its ratings are weaker than Enterprise Products Partners’ (EPD). Would you please compare these companies? Is Valuentum saying Kinder Morgan is a better bet than Enterprise Products Partners because Kinder Morgan is a corporation and not an master limited partnership? By Brian Nelson, CFA Answer: Thanks for the note and your question. It’s often difficult for us to compare and contrast two companies that are very net debt heavy as we tend to be very debt averse in the first place. That said, there are a few things that we look at with respect to Kinder Morgan versus Energy Products … Read more