Member Articles

Best Idea Apple Exemplifies Valuentum’s Methodology: Is it a Value or Growth Stock? Both…It’s a Valuentum Stock

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On Tuesday, Apple (AAPL) posted excellent first-quarter results by almost every measure. The iPad-maker had its highest quarterly revenue and earnings ever and set all-time records for iPhone, iPad, and Mac sales. The performance also relieved some concerns regarding the leadership transition to new Apple CEO Tim Cook following the passing of legendary innovator Steve Jobs. Though we continue to hold the firm in the portfolio of our Best Ideas Newsletter, we may look to trim our position and take some profits in coming weeks. Our above-market fair value estimate for Apple remains unchanged. The company blew by consensus expectations pretty much across the board: revenue ($46.33 billion), gross margin (44.7%), and earnings per share ($13.87). Apple sold a whopping … Read more

Harley-Davidson Swings to Fourth-Quarter Profit; Sees More Motorcycle Sales in 2012

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Harley-Davidson (HOG) reported strong fourth-quarter sales that showed a solid uptick in motorcycle sales. We think the motorcycle-maker’s results bode well for the US economic environment.   Harley’s revenue jumped nearly 12% on the heels of a 10.9% increase in unit motorcycle sales worldwide (unit motorcycle sales jumped almost 12% in the US). On an international basis, dealers experienced a 9.7% increase in unit sales. With global motorcycle sales increasing less than 6% for the entire year, the fourth quarter indicates that we are in the midst of accelerated demand for motorcycles on the basis of increased consumer confidence.   Harley-Davidson’s income from continuing operations swung to a gain of $54.6 million ($0.24 per share) versus a loss of over … Read more

Texas Instruments Calls Bottom in Chip Demand Despite Poor Fourth-Quarter Results; We Prefer Intel

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Texas Instruments (TXN) reported messy fourth-quarter results after the close Monday that were littered with one-time charges, making year-over-year comparisons difficult. We’ll be taking a close look at our forecasts for Texas Instruments, but we do not expect to make a change to our fair value estimate at this time. At face value, the performance was subpar. Texas Instruments’ revenue fell 3%, operating profit dropped 70%, while earnings per share tumbled 68%. Analog revenue, which includes high volume analog & logic, power management, etc., advanced 12% in the quarter, while the remaining segments (Embedded Processing, Wireless—OMAP application processors) experienced sharp revenue declines. Operating profit fell across all major revenue categories, with the steepest fall coming from its Embedded Processesing unit, … Read more

Will Microsoft’s Mobile Strategy Lead to its Revival?

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A ten-year chart of Microsoft (MSFT) is not a pretty site. Excluding dividends, shares are down a little over 10%, and the PE has contracted from above 40 to, at times, below 10. In the same time period, Microsoft has gone from a Wall Street tech darling that dominated computing to a dinosaur, legacy tech-company. Regardless of how accurate such a description may be, investors have in droves fled to Apple (AAPL), which makes innovative consumer devices that have impressed the masses. During this same time period, Microsoft has had a few wins, including Windows 7, continued excellence with its Office products, Xbox, and Kinect. Throughout the same period we’ve also seen the Zune, unsuccessful tablets, a weak mobile strategy, … Read more

Hasbro Could Be In For a Big Year; Its Hefty Yield Makes it Even More Attractive

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With the invention of intuitive iPads and the interactive Xbox Kinect, you would think children would be ready for technology to take over their childhoods. And that may be correct. iBook 2 might result in learning taking place exclusively in the digital world. In the meantime, kids are still kids, and they still enjoy playing with toys. Though it’s unreasonable to expect toys to absolutely explode in popularity, they’ve been around for hundreds of years, and they won’t go completely out of fashion tomorrow. We think the digital age has beaten down shares of Hasbro (HAS) to an attractive valuation. The stock currently trades at around 11x our 2012 earnings forecast, with a dividend yield of almost 3.7%. With a … Read more

GE’s Industrial Backlog Hits New Highs in Fourth Quarter; GE Capital Continues to Improve

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General Electric (GE) reported fourth-quarter results Friday that showed strong organic revenue growth, a surge in infrastructure orders, and continued improvement at GE Capital. We continue to watch GE’s industrial backlog closely, and its continued growth to record levels suggests to us that the global economy is healthier than most pundits believe.   GE’s total revenue expanded 4% (excluding NBCU) in the quarter, and the firm’s industrial revenue growth came in at 10% on the heels of organic expansion of 5%. Infrastructure orders jumped 15% (organic orders increased 9%) during the quarter, with equipment orders up 23% and services up 7%. Notably, industrial segment emerging market orders increased a whopping 26% from the same period a year ago. GE had … Read more

Best Idea Intel Reports Fourth-Quarter Results; Expects Solid Sales Expansion in 2012

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Intel (INTC) reported better-than-expected fourth-quarter results Thursday that relieved some concerns about the PC market following the chipmaker’s negative pre-announcement several weeks ago. We are maintaining our above-market fair value estimate for Intel and continue to hold the firm in our Best Ideas Newsletter and Dividend Growth Newsletter. “$54 billion in annual (GAAP) revenue, up 24%, $2.39 in annual (GAAP) EPS up 19%, and $18 billion in dividends…” Reading the above headlines, 2011 was truly an excellent and record-breaking year for Intel, and we believe 2012 will continue to be a good one for investors. For example, the firm’s product and technology pipeline includes opportunities presented by Ultrabook systems, data center and security needs, as well as Intel-powered smartphones and … Read more

Microsoft Posts Fiscal Second-Quarter Results; Shares Remain Cheap

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Microsoft (MSFT), one of the larger holdings in the portfolio of our Dividend Growth Newsletter, reported solid fiscal second-quarter results Thursday on the heels of strong corporate demand and holiday sales. We continue to be pleased with Microsoft’s performance and maintain our view that the shares continue to have valuation upside potential. The firm’s revenue advanced 5% from the prior-year period thanks primarily to expansion in its Server/Tools and Entertainment/Devices segments, which advanced 11% and 14.5%, respectively. The Business Division, its largest segment, increased 3% from the prior-year period, and the firm noted that it has sold nearly 200 million licenses of Office 2010 (in the 18 months since launch). Revenue in the firm’s Windows division fell 6%, and management … Read more

IBM Posts Solid Fourth-Quarter Results; Software Continues to Drive Performance

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IBM (IBM) reported fourth-quarter results Wednesday that capped off a year of record earnings per share, revenue, profit and free cash flow. We continue to like IBM, but we are waiting for an entry point that captures an appropriate margin of safety before adding it to either our Best Ideas Newsletter or Dividend Growth Newsletter.  The firm’s revenue jumped a modest 2% (1% adjusting for currency) as an 8% decline in sales from Systems and Technology–due to the timing of product launches, namely the System z mainframe server–weighed down strong performance in Software, which advanced 9% due to strength in its middleware product suite (WebSpere, Tivoli, etc.). Geographically, sales in the Americas’ region increased 3%, while revenues from Europe/Middle East/Africa advanced 1%. … Read more