Member Articles

Why Portfolio Holdings Can Sometimes Have Low VBI Ratings

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Q: Most of the stocks in the Best Ideas Newsletter portfolio carry a Valuentum Buying Index rating of 6 or lower. Why? A: This is a great question because it gives us the opportunity to explain the robustness and multi-faceted dynamics of the Valuentum Buying Index methodology.  First, the Valuentum Buying Index, or the VBI, breaks down into three in-depth, standalone processes: a discounted cash-flow process, a relative value process, and a technical/momentum assessment. Each of these three pillars of the Valuentum Buying Index contain analytical insight contributing to the overall investment consideration beyond a one integer system. The combination of these three criteria results in each firm’s Valuentum Buying Index rating (from 1 through 10, with 10 being the … Read more

Early Read: Gilead Guides Revenue to Decline in 2016, Below Consensus

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Gilead’s (GILD) fourth-quarter report came and went, and it was just fine. Strong revenue and earnings growth and phenomenal free cash flow generation were all the rage in the quarterly press release. It even announced a new $12 billion share buyback program and upped its dividend 10% starting in the second quarter. We love the company that cured hepatitis C (“hep C”), but we no longer include it in the Best Ideas Newsletter portfolio. No quarterly report could ever cure our biggest concerns.   To put it straight, Gilead’s outlook for 2016 is nothing to write home about, and the probability of intense pricing competition in its blockbuster hep-C franchise taking its toll in 2017 and beyond is something even … Read more

Best Idea Michael Kors Up 20%+ — Yawn?

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“A significantly “undervalued stock” that is dropping like a rock is a huge red flag, and the Valuentum system offers a methodological overlay to incorporate the very valuable information contained in  share prices.” – Brian Nelson, CFA What a day for Michael Kors (KORS)! At the time of this writing February 2, shares of the aspirational brand are soaring 20%+. Yes, it is a holding in the Best Ideas Newsletter portfolio, “Valuentum’s Best Ideas Portfolio,” and yes, we added to the position in Michael Kors November 5, 2015, “Email Transaction Alerts.” The email transaction alert, which included some profit-taking in Altria and additions to the positions in Buffalo Wild Wings and Michael Kors, can be downloaded here. Prior to the … Read more

Google…Ahem…Alphabet!

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“A falling stock price doesn’t mean the stock is cheaper; it doesn’t mean that the stock will go back up; and it certainly doesn’t mean that the stock can’t fall further. In some cases, a falling stock can become more expensive as it drops, if its value falls by a greater amount.” – Brian Nelson, CFA The company formerly known as Google, Alphabet (GOOG, GOOGL), is surging in after-hours trading February 1. As a result of Google’s stock split in 2014, we include both share classes (non-voting Class C, GOOG, and Class A, GOOGL) in the Best Ideas Newsletter portfolio, collectively one of its largest holdings (5%+). Alphabet, then known as Google, first registered a 10 on the Valuentum Buying … Read more

Alerts: A Long-Time Favorite from the Bullpen and An Interest Rate Risk Hedge

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We’ve long appreciated the stand-out dividend strength characteristics of Cracker Barrel (CBRL) among the full-service restaurant space, and we see an opportunity to add the company to the Dividend Growth Newsletter portfolio today (see page 5). We’ve outlined our case for Cracker Barrel in the past, “Free Cash Flow Feeds Cracker Barrel’s Dividend Growth,” and while we haven’t quite gotten our price just yet, we’re going to inch forward a bit with a small 1.5% position in the Dividend Growth Newsletter portfolio at this time. The company yields a very nice ~3.4%, and its Dividend Cushion is solid for that high of a payout. One of the areas we’re expecting Cracker Barrel to surprise to the upside is the positive … Read more

Dividend Growth ‘Bubble’ To Continue But For How Long?

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You’ve heard about low interest rates. You may have even heard about a ZIRP, zero interest-rate policy, as had been the case in the US for years, but have you heard of NIRP, negative interest-rate policy? Well, that’s the latest with respect to Japan (EWJ), which is home to the third-largest national economy in the world after the US and China. On January 29, the Bank of Japan (BOJ) introduced a negative benchmark interest rate of -0.1%, meaning that instead of paying interest on deposits, it will charge commercial banks to hold their money. This may make Japanese exports cheaper to stimulate growth, but my goodness, talk about a move to push “parked” assets out of the country. The US … Read more

Valuentum Releases Updated Valuation Model on Kinder Morgan

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Valuentum’s discounted cash-flow model on Kinder Morgan is available for download. To download Excel model:  To download 16-page valuation report:  To dowload supplemental dividend report:  To access the latest quarterly reading on Kinder Morgan (KMI): Time to Load Up on Kinder Morgan? To access Kinder Morgan’s stock landing page on Valuentum’s website: /search-by-symbol/?tag=kmi ——————– Valuentum provides full coverage on more than 1,000+ stocks and dividends, including providing fully-populated models, per request. Please contact us if we can be of any assistance.

Discuss: The Biggest Ruse Ever Perpetuated?

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There is a crisis on Wall Street. We’re not talking about the “Big Banks” or outrageous CEO pay or loose monetary policy — we’re talking about the biggest ruse ever perpetuated on individuals, and it is even worse for financial advisors that employ these vehicles. We’re talking about index funds. Vanguard’s expense ratio on the Vanguard S&P 500 ETF may seem cheap at 0.05% per annum, for example, but let’s be fair. The value that Vanguard brings to the table isn’t much of anything to charge even a sliver of assets. Vanguard doesn’t maintain that index, it doesn’t conduct research on the companies in that index – in many cases, all it does is copy the grouping of stocks. Who … Read more

Alerts: High-grading! GILD–>JNJ; EBAY–>FB

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Pictured: The long-term view of Gilead’s Harvoni franchise has blurred. Prices updated, as of 1:36pmCT. By Brian Nelson, CFA We were very pleased by the market action of Friday, January 29, with the top weightings in each of the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio performing extremely well. Visa (V), the largest weighting in the Best Ideas Newsletter portfolio (7%+), is simply “on fire,” with the company trading ~5% higher on the session at the time of this writing. The high end of our fair value range of $90 per share for shares is starting to look within reach for the credit-card network, “.” Visa generates an operating margin in the mid-60% range (not a typo), and there … Read more

Microsoft!

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  By Brian Nelson, CFA If there is any stock that you might think of when you think of Valuentum, it probably is Microsoft (MSFT). The software giant put up fantastic fiscal second-quarter (calendar fourth-quarter) results after the close January 28. Kudos to my University of Chicago Booth School of Business “colleague,” Microsoft CEO Satya Nadella. Things have really taken off since he took the helm in February 2014, “.” Microsoft is one of the largest holdings in the Dividend Growth Newsletter portfolio, and it has been one of the best-performing equities since registering a high rating on the Valuentum Buying Index. The company also has been the “focus” income idea in nearly every one of Valuentum’s dividend growth presentations, … Read more