Member Articles

Alert: Adding General Motors; Talking Amazon

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Image Source: Michael Kumm General Motors may be one of the best deals on the market today, and we’ll be adding it to the portfolio of the Best Ideas Newsletter. Let’s also talk Amazon, and why shares of the giant are “uninvestable” from our perspective. By Brian Nelson, CFA Just a couple things this morning. First, we’re adding a 2% weighting of General Motors (GM) to the portfolio of the Best Ideas Newsletter. We continue to be enamored by the auto giant’s valuation opportunity, and we encourage members to read our take on the company’s investment considerations at the following, “Major Automakers: Fundamental Uncertainty But Potential Investment Opportunity…Soon (August 5, 2016).” Soon is today. Though we’re fully aware of the … Read more

Amazon Is Uninvestable

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Image Source: Claudio Toledo By Brian Nelson, CFA Amazon is uninvestable – there we said it. Let’s learn why though. We can’t make such a blanket statement without backing it up with some serious financial analysis and valuation logic. The following is for educational purposes only and represents an excerpt from Valuentum’s Financial Statement Analysis seminar. I say this because the models included in the below exercise are not our most recent ones of the respective companies. Those models are available on a per-request basis. So reach out to us! Here’s what I want you to do: 1) Open the Amazon (AMZN) financial model excel file . Go to the ‘Model’ tab. 2) View fair value estimate of $439 in … Read more

GAAP or Non-GAAP, No Matter — It’s Free Cash Flow

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Image Source: Christopher Accounting representation of earnings per share, whether GAAP or non-GAAP, is not as important to the valuation context as future free cash flow. Let’s talk about this concept a bit more within our valuation processes. By Kris Rosemann Q: I have been considering investing in Facebook (FB). Your projected five-year operating margin for Facebook is 58%. Currently it is around 40% and has averaged about 38% the last three years. I was wondering if you would be willing to elaborate on those expectations. A: Thank you for the question. What you have noticed in our operating margin assumptions is the discrepancy on the income statement between GAAP and non-GAAP reporting. While our historical data is pulled on a … Read more

Walmart’s Core Operating Income Falls 7%+; Target’s Comparable Store Sales Drop

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Image Source: Mike Mozart By Brian Nelson, CFA Warren Buffett’s Berkshire Hathaway (BRK.A, BRK.B) isn’t the only firm that has become less bullish on Walmart (WMT). The company that the Oracle of Omaha built recently reduced its stake in Walmart to 40.2 million shares from 55.2 million shares, but Valuentum is equally worried about the big box giant’s long-term picture. Target (TGT) is not faring much better, if it is faring better at all. The structural headwinds impacting both companies aren’t going away anytime soon, and while you wouldn’t know it by the market’s positive reaction to Walmart’s second-quarter report, total operating income, adjusted for the gain from the sale of Yihaodian, fell more than 7% in the period. A … Read more

Cisco’s Awesome Dividend Growth Potential

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Image Source: BY-YOUR-⌘ By Kris Rosemann We hope you are having a great start to the week! We wanted to bring your attention to one of the holdings that we include in the portfolios of the Best Ideas Newsletter and Dividend Growth Newsletter, Cisco (CSCO). The newsletter portfolios are one of the best ways to measure Valuentum’s asset allocation and stock-selection performance, and they are released on the 1st of the month (Dividend Growth Newsletter) and the 15th of the month (Best Ideas Newsletter), respectively. If you ever want to view the archives, they are located in the left column of the website, “View Current and Archived Newsletters.” Both of the newsletter portfolios surface ideas that we think fit well within … Read more

Dividend Increases/Decreases for the Week Ending August 19

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Below we provide a list of firms that raised/lowered their dividends during the week ending August 19. 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 American Financial (AFG): now $0.3125 per share quarterly dividend, was $0.28. Briggs & Stratton (BGG): now $0.14 per share quarterly dividend, was $0.135. Brinker (EAT): now $0.34 per share quarterly dividend, was $0.32. Chemical Financial (CHFC): now $0.27 per share quarterly dividend, was $0.26. Community Bank System (CBU): now $0.32 per share quarterly dividend, was $0.31. Delta Natural Gas Company (DGAS): now $0.2075 per share quarterly … Read more

Videos: Valuentum’s Four-Part Education Workshop

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You are just a few steps away from downloading the videos of Valuentum’s 4-part Education Seminar. More than 5 hours of insightful video and audio content! At Valuentum, we believe in the ongoing education and development of our employees, members and visitors. Lifelong learning is something our firm holds very dear, as part of our corporate mission is to serve the needs of investors of all types. Having trained and mentored equity and credit analysts at such large research firms as Morningstar, President of Equity Research & ETF Analysis Brian Nelson has dedicated a large portion of his career to helping others achieve their professional aspirations and investing goals. This dedication to investment education has continued at Valuentum. Purchase the … Read more

Little Progress Seen in Iron Ore Market Balancing

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Image Source: Peter Craven By Kris Rosemann Recent reports from the likes of BHP Billiton (BHP) have echoed our previous concerns with the iron ore market, “Iron Ore Market Stability Still A Ways Off.” A number of factors on both the supply and demand sides of things are expected to provide pressure to the price of iron as we move further into the back half of 2016. BHP, for one, anticipates economic uncertainty, political instability and well supplied markets to continue weighing on iron ore prices, among other commodities.  Seasonal factors will weigh on Chinese (FXI) demand–the nation is the world’s largest purchaser of seaborne iron–in the winter months when construction typically slows as a result of more inclement weather. … Read more

Pop the Bubbly? Everyone Is Getting Rich

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Image Source: Bryan Rosengrant “Imagine a bank that pays negative interest. In this upside-down world, borrowers get paid and savers penalized. Crazy as it sounds, several of Europe’s central banks cut key interest rates below zero in 2014, and now Japan has followed…some 500 million people in a quarter of the world economy (are) living with rates in the red.” — Bloomberg By Brian Nelson, CFA In April 1979, Paul Volcker became the Chairman of the Federal Reserve, and after a series of rate hikes, the federal funds rate reached a high of 20 points by the end of the year and into 1980. Though the move was to combat double-digit inflation at the time, it’s worth pondering what such … Read more

Priceline Higher After Outperforming Conservative Guidance

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By Kris Rosemann Shares of Best Idea Newsletter portfolio holding Priceline (PCLN) experienced a healthy bounce following its 2016 second quarter report after the close August 4 as results came in above its guidance for the period. We think the firm is beginning to gain a reputation for setting conservative guidance only to report much stronger results, something we have seen repeatedly from it in recent quarters “Priceline Shares Under Pressure… Again.” Gross travel bookings growth came in at 19% on a year-over-year basis as reported, which is above the 11%-18% guidance range management issued for the period and an acceleration from the second quarter of 2015 reported growth rate of 11% (gross travel bookings growth decelerated in constant currency, … Read more