Member Articles

The Delicious Business Model of Domino’s Pizza

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Domino’s Pizza (DPZ) offers investors one of the best business models, and the company garners one of the ‘Highest Rated’ economic castles in our coverage universe. That means that for each dollar of capital it invests the company generates gobs and gobs more, so much that it is more than almost any other company that we follow. The franchiser really sets the standard with respect to what we define as a pure “Economic Castle.” Not only did the pizza giant raise its dividend nearly 23% February 25, but the company beat expectations on both the top and bottom-line in its reported fourth-quarter results. It’s hard to believe, but domestic same-store sales grew more than 10% in the quarter versus the … Read more

Kohl’s Dividend Mostly a Distraction

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Image Source: Mike Mozart Kohl’s (KSS) may be doing better than JC Penney (JCP) and Bon-Ton (BONT), the owner of Carson Pirie Scott, but the department store arena is flailing and has been for some time, even before the days of irrational exuberance when hedge fund giant Eddie Lampert merged Kmart and Sears (SHLD) in 2005. Things have only headed south since that time, and even the strongest in Macy’s (M), which has experienced falling comparable store sales and a plummeting gross margin as of late, has been forced to pursue innovative ways to generate value for shareholders in the midst of “consumer abandonment,” namely the consideration of an independently-traded real estate investment trust. Fourth-quarter results at Kohl’s, released February … Read more

Target’s E-Commerce Growth the Real Story

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Image: Target’s mascot Bullseye sporting new shades at a local job fair. We have a difficult time dismissing Target’s (TGT) short-sightedness in abandoning its efforts in Canada, as in time, its ability to continue to drive traffic and store count in the US higher will plateau. In no way will this occur anytime soon, or within the next few years or so, but it will, and Target will have wished it wouldn’t have given up in Canada. But that’s not the story today Skeptics are looking wrong in a big way, as Target showcased a pace of e-commerce expansion better than that of Wal-Mart (WMT) and even Amazon (AMZN) and eBay (EBAY) in its most recently-reported fourth quarter. Digital sales … Read more

ETE/ETP: You Are Smart Not to Focus on Distributable Cash Flow

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There’s nothing like taking a punch. Jim Cramer wrote up a piece December 19, “Energy Transfer Partners: Why You Shouldn’t Worry, (Real Money)” (1) calling into question our analyst team and independence. Valuentum is offering new perspectives in the industry, and the old guard may not like it that much. Not only has the ETE (ETE)/ETP (ETP) Group CFO stepped down since that article, shattering confidence, but units of both Energy Transfer Equity and Energy Transfer Partners have fared no better, still but a fraction of their former selves. The headline numbers from the fourth-quarter report of Energy Transfer Equity and Energy Transfer Partners were horrible. Both entities missed consensus expectations, and investors have to get over the idea that earnings … Read more

Recent Add Cracker Barrel Surges Ahead; BHP Cuts

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February 23 was met with intense selling as investors digested news that the crude oil (USO) markets won’t become rational anytime soon. As we had outlined in our opening piece to the Best Ideas Newsletter a few days ago, “,” Saudi Arabia is not going to back down, and the Oil Minister of the member nation of OPEC even went so far as to say he “welcomes new additional supplies,” suggesting that the global glut of crude oil will continue for the foreseeable future. Commodity-oriented equities led the selling pressure. For those that have been reading our work for the past several months, none of this is new “news.” We’ve been warning about the risk for some time, and we … Read more

Key Treatment Momentum Drives Big Pharma

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The momentum of key drugs and treatments is often a solid indicator for the coming performance of a pharmaceutical firm. Growing competition and other market pressures out of a company’s control can often cause material ebbs and flows in financial performance, making a strong and stable pipeline necessary to sustained success. As we walk through the results from some of the biggest names in the pharmaceuticals industry, let’s get a feel for the trajectory of each firm’s drug portfolio and pipeline moving into the rest of 2016. AbbVie (ABBV) AbbVie reported a quarter of strong growth January 29, as adjusted net revenues jumped more than 24% on an operational basis, and GAAP net revenue increase more than 17% from the … Read more

You Can Change Your Mind!

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By Brian Nelson, CFA It looks like the energy master limited partnership (AMLP, AMZ) space has been catching a bid the past few days. It’s so important, however, to keep things in perspective, and the best way to do so is to look at an intermediate-term chart of the group, which remains under considerable stress, “Bye Bye Energy MLPs, Part II (Jan 2016)” The market wants some of the most beaten down equities to rally, including Energy Transfer Equity (ETE) and Energy Transfer Partners (ETP), which have fallen devastatingly from their respective peaks of $35 and near-$70 per share, respectively. If you’re not looking at charts, you’re leaving a lot of free information on the table. Energy master limited partnerships, … Read more

Growing Cautious on Teva Pharma

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By Paul Tait and Kris Rosemann Since Teva Pharmaceuticals’ (TEVA) addition to the Best Ideas Newsletter portfolio in mid-2013 in the low-$40s, the company has been a strong performer, even though the past several months have been rather rough. Following difficult fourth-quarter results, we’re ready to take profits on the equity, and we plan to release an alert in the coming days, hopefully on market strength. Last year was a transformational year for Teva, or in the words of management, a year of “exceptional strategic, operational and financial performance.” The company has pursued a number of growth-driving acquisitions to offset headwinds mounting for its leading drug Copaxone, a top treatment for multiple sclerosis. The spotlight has shifted to the development … Read more

Saturday Morning Musings: Nelson’s Two Pet Peeves

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Brian Nelson, CFA First, my pet peeve #1. In the case of our call on Kinder Morgan (KMI) from last June, “5 Reasons Why We Think Kinder Morgan’s Shares Will Collapse, (which they did)” we believed market observers and analysts were exploiting investors’ lack of knowledge regarding the specificity of various measures of “cash flow.” To no surprise perhaps, they are still doing it! There are at least a half dozen measures of “cash flow,” three on the cash flow statement alone (CFO, CFI, CFF), one derived from the cash flow statement (CFO less all capex = FCF), and a handful associated with valuation (FCFF = EFCF, FCFE), and at least one associated with master limited partnerships, the most inappropriately-named … Read more

5 Things New Subscribers (or Not-So-New Subscribers) Should Do

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Here are the top 5 things new subscribers (or not-so-new subscribers) should do: 1. Send an email to President Brian Nelson, CFA If haven’t touched base with Brian yet, please make it a priority over the next few weeks. Brian strives to answer all questions received personally, with your needs in mind. Some members often note that having access to Brian is worth the few dollars a month subscription alone. It’s important to get your questions answered – the website is only part of the service. We have an analyst team on call. 2. View the newsletters The newsletter portfolios, the Best Ideas Newsletter and Dividend Growth Newsletter, are prime real estate. If you haven’t visited the portfolios found within … Read more