Member Articles

Stumbles in Europe, Footwear, and Rising Input Costs Could Keep Shares of Under Armour at Bay

by

This article appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/277905-under-armour-solid-company-but-shares-are-significantly-overvalued  We wanted to provide subscribers with our thoughts on Under Armour (UA). Although we expect the company to follow Nike’s excellent results and post solid performance in its second quarter, the shares look significantly overvalued to us in the $75-$80 range. The risk-reward balance is not in investors’ favor at these levels. Apparel Remains Strong… If we can gather anything pertinent about Under Armour from Nike’s (NKE) earnings released Monday, we can see that athletic apparel, specifically in North America, is on fire. Year-to-date, Nike’s North American apparel sales are up 21%, including a second-quarter surge of 28%. This is consistent with the apparel growth we’ve seen at Adidas (ADDYY.PK) and Lululemon (LULU). Under Armour, with a smaller base than Nike, … Read more

Altria’s Dividend Yield is Quite Tempting

by

Some readers may be surprised that (Altria) is a top performer for investors in the face of the onslaught of government restrictions and legal actions that have cost the firm tens of billions of dollars and threaten the cigarette manufacturer with bankruptcy. But in the capital markets, bad news for the firm often is transformed into good news for investors. Many shun the stock in the company and fear that its legal liability for producing a dangerous product–cigarettes–will eventually crush the firm. This aversion to the firm pushes down the price of (Altria’s) shares and raises the return to investors who stick with the stock. As long as the firm survives and continues to be very profitable, paying out a … Read more

28 Business Thinkers Who Changed the World

by

Valuentum’s subscriber base enjoys reading the latest and greatest investing books. As a result, Valuentum requests and receives business and investing books before they are officially released. Our editorial staff took a look at the following book, and here’s what we thought after reading it: 28 Business Thinkers Who Changed the World: the Management Gurus and Mavericks Who Changed the Way We Think about Business By Rhymer Rigby. Kogan Page, 2011. 232 p. ISBN 978-0-7494-6239-0.Book Release Date: June 28, 2011 British journalist Rhymer Rigby tackles the lives of the most influential business thinkers in his latest work. Rigby (freelance journalist and contributor for the Financial Times) takes a journalistic approach, reporting on the lives and businesses of these 28 gurus without offering … Read more

Lorillard’s Valuation Leaves Something to Be Desired

by

This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/276520-lorillards-valuation-leaves-something-to-be-desired  The FDA recently ruled that beginning in the fall of next year, all cigarette packaging and advertisements in the U.S. must reveal prominent and perhaps gory health warning labels. These new and larger cigarette warnings, which include an image of a man smoking through a hole in his throat and an image of a parent holding a baby as smoke drifts toward them, represent a huge step by the current administration to curb new smokers from picking up the habit, while encouraging others to quit. But should investors of Lorillard (LO), Altria Group (MO) and Reynolds American (RAI) be concerned? Regulation has long been a part of the tobacco industry and while … Read more

Our Case for Precision Castparts — Upside to $200 Per Share

by

Precision Castparts has long been a favorite of ours. The firm’s investment cast products segment (about 34% of sales) makes the structural castings (metal blocks) and the rotating airfoils (blades) that form aircraft jet engines. Though a structural casting has a longer useful life, a jet engine’s airfoil components frequently need to be replaced upon maintenance (think razor, razor-blade model). The firm’s forged products (about 41% of sales) are used in landing gear, bulkheads, and other airframe components, while its fasteners (about 25% of sales) are used in such critical applications as wing-to-fuselage and engine-to-wing connections. Precision’s components are crucial to flight safety, particularly its metal castings, which preserve engine integrity during intense thermal conditions. Plus, and perhaps most important, Precision … Read more

Airbus Has Boeing’s Back Against the Wall, Seek Opportunities in Supply Chain

by

This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/276439-airbus-has-boeings-back-against-the-wall-seek-opportunities-in-supply-chain Last week in anticipation of the Paris Air Show–a huge event for the aviation industry–we outlined our forecasts for market share in the narrowbody aircraft segment, which showed Airbus’ A320 gaining a clear lead during the next few decades.  So far during the show, Airbus has received a plethora of orders for its A320neo (new engine option), a re-engining of its popular A320, which competes with Boeing’s 737NG [and within a few years, entrants from around the globe: Comac’s C919 from China, Bombardier’s (BDRBF.PK) CSeries, and the Irkut/UAC MS-21 from Russia]. Orders for the A320neo are coming from around the globe, with Airbus garnering wins from India’s Indigo, Chile’s LAN Airlines (LFL), and domestic carrier Republic (RJET). We’re currently watching for any major shifts within the discount airline … Read more

Waste Management Looks Undervalued, Boasts Attractive Yield

by

This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/275873-waste-management-looks-undervalued-boasts-attractive-yield At Valuentum, we employ a discounted cash-flow model to arrive at a fair value estimate for every company within our equity coverage universe. In the waste industry, using a discounted cash-flow model is the best tool for valuation, given the robust cash-flow characteristics of participants. We outline below our forecasts and fair value estimate for Waste Management and offer up our model template to investors if they are interested in using it to value any operating (non-financial) company they wish. This model template can be found at the following location: DCF Valuation Model. But before we dive into the numbers on Waste Management, we’d like to invite investors to take a read of a waste-industry primer, which goes into … Read more

Debt: the First 5,000 Years

by

Valuentum’s subscriber base enjoys reading the latest and greatest investing books. As a result, Valuentum requests and receives business and investing books before they are officially released. Our editorial staff took a look at the following book, and here’s what we thought after reading it: Debt: the First 5,000 Years By David Graeber. Melville House Publishing, 2011. 544 p. ISBN 978-1-933633-86-2.Book Release Date: July 12, 2011 Graeber (Reader in the Department of Anthropology at Goldsmiths, University of London) takes a multi-pronged approach to exploring debt, looking at both the moral and economic underpinnings of debt as well as providing anthropological evidence of the long history of debt and credit.  He refutes the generally accepted history of money, which posits that barter systems led … Read more

Word of Caution: Boeing’s Narrowbody Build Rate Is Unsustainable

by

This article originally appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/275567-word-of-caution-boeings-narrowbody-build-rate-is-unsustainable  Competition in the narrowbody market continues to heat up, and recent events only support our view that the large commercial jet-making duopoly of Boeing (BA) and Airbus will be shattered in coming years. First, last Wednesday, Boeing released plans to increase production of its 737 workhorse to 42 jets per month by the first half of 2014. We view this strictly as a competitive response to clear its massive narrowbody backlog in the face of firming global competition, not as an indication of incremental demand for Boeing’s soon-to-be-legacy 737NG (it will be replaced with either a re-engined model or a brand new build in coming years). Frequent readers were aware … Read more

A Serious Blow to Boeing is Looming

by

This article was referenced on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/275567-word-of-caution-boeings-narrowbody-build-rate-is-unsustainable As competition in the narrowbody market heats up before the Paris Air Show next week, Boeing appears to be losing favor with two of its best customers, Southwest and Ryanair. For those unfamiliar with Southwest’s and Ryanair’s fleets, they are all-Boeing 737 airplanes, and recent actions by these two carriers give us pause, especially as Boeing drags its feet on deciding what to do next with its workhorse 737. As Bloomberg reported some time ago, Southwest’s CEO Gary Kelly is not all that thrilled by Boeing’s delay in responding to Airbus’ A320neo and the CSeries offered by Bombardier–both planes offering cost advantages better than the 737NG in their corresponding seat … Read more