Member Articles

Don’t Let “Them” Spin the Narrative

by

By Brian Nelson, CFA Let’s call it how it is: 2022 was an absolute nightmare for the 60/40 stock/bond portfolio. During the year, the 60/40 stock/bond portfolio was down 16.9%, according to data from the Vanguard Balanced Index Fund Shares (VBIAX). During 2022, the S&P 500 (SPY) index was down 18.2%, meaning that the 60/40 stock/bond portfolio, despite allocating to 40% bonds, captured over 90% of the downside risk. Modern portfolio theory is dead: Stocks have done far better than bonds during upswings, and only slightly worse during downturns. The risk/reward for the 60/40 stock/bond portfolio just doesn’t add up anymore. Bond prices did not move inversely to stock prices during the COVID-19 meltdown, and they did not move inversely … Read more

We’re Glad Microsoft Sees Promise in ChatGPT

by

Image Source: Mike Mozart By Brian Nelson, CFA Not having to worry about an upstart taking ChatGPT to the finish line is a big relief for the newsletter portfolios. Having already invested $1 billion in ChatGPT’s owner OpenAI in 2019, Microsoft Corp. (MSFT) may invest as much as $10 billion more in the artificial intelligence (AI) chatbot. Reports indicate that Microsoft would own a 49% stake in OpenAI, while getting a 75% share of OpenAI’s earnings. The greater control over ChatGPT, of which we brought to readers attention in our December 5 note, “Maintaining Our Fair Value Estimates Across Ad-Driven Social Media Equities In Light of Long Term AI-Driven Chatbot Threats,” will likely augment Microsoft’s search technology and its web … Read more

Exact Sciences: Fast-Growing Molecular Diagnostic Company But Huge Risks

by

Image Source: Exact Sciences By Brian Nelson, CFA On January 9, diagnostic testing firm Exact Sciences (EXAS) issued promising preliminary guidance for its fourth quarter of 2022. The company expects fourth-quarter 2022 revenue, excluding COVID-19 testing, to advance 28% in the quarter on a year-over-year basis (considerably higher than the consensus forecast at the time), with screening revenue jumping 45% and precision oncology revenue advancing modestly, after excluding its divestiture of Oncotype DX Genomic Prostate Score test (completed in August 2022) and foreign exchange impacts. The company’s screening revenue consists of sales of its innovative Cologuard tests, which we’ll talk more about in this note, and its recently-acquired genetic testing firm PreventionGenetics, while its precision oncology division generates revenue from its … Read more

These Things Sometimes Take Time

by

Image: The QQQ, which tracks the Nasdaq-100 Index, including Apple, Alphabet, and Microsoft has been a tremendous generator of wealth. Image Source: TradingView By Brian Nelson, CFA After the huge collapse in the markets in 2020, and the huge rebound in 2021, followed by a large retracement in 2022, we think things are going to be boring in 2023. They are likely going to be so boring that many investors will lose interest at the exact time that they should be most interested–when markets are well off their highs and uncertainty is near its peak.  Dollar Cost Averaging Dollar cost averaging is among the most powerful drivers behind long-term returns. Measuring returns from prior peak to prior peak is often … Read more

Dividend Increases/Decreases for the Week of January 6

by

Below we provide a list of firms that raised their dividends during the week ending January 6. 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                Alamo (ALG): now $0.22 per share quarterly dividend, was $0.18. Alpine Summit Energy Partners, Inc. (ALP.U:CA): now $0.0315 per share monthly dividend, was $0.0300. Ashtead Group plc (ASHTY): now $0.55 per share dividend. Bank OZK (OZK): now $0.34 per share quarterly dividend, was $0.33. Immersion (IMMR): now $0.10 per share special dividend. Life Storage (LSI): now $1.20 per share quarterly dividend, was $1.08. Pine Trail … Read more

The Fed ‘Can’t Stop, Won’t Stop’ Until Labor Market Feels More Pain

by

  Image: Prices for private label brands at Aldi are considerably lower than those of branded products. The consumer staples sector, however, remains fully-priced with a 21+ forward earnings multiple, and many constituents hold large net debt positions. We believe the sticking point for the Fed is not groceries or gasoline prices, but rather the labor markets, which remain very strong, despite layoffs. Image Source: Valuentum By Brian Nelson, CFA We’ve yet to see the worst of job cuts, in our view. The rapid shift in the global economy mid-2022 was profound, as many companies were still building in anticipation of increased demand during the first half of the year to the point where demand growth started to dry up, … Read more

Adobe Acrobat Pro Prices Up 33%; Price Tag of Figma Deal Remains Overhang on Shares

by

Image: Adobe’s long-term market opportunity is huge. Image Source: Adobe By Brian Nelson, CFA All things considered, fiscal 2022 was a solid year for Adobe (ADBE), as reported in its latest quarterly earnings report December 15. The company generated record revenue, operating income, and operating cash flow, and we loved that management is talking in terms of the “next decade of growth,” not next quarter or even next year. We like executive suites that are positioning their companies for the long run, and we think Chairman and CEO Shantanu Narayen has done a great job leading the charge. Adobe is among the most well-known software companies due in part to its Adobe Acrobat software. Almost anyone that has applied for a job has … Read more

Our Reports on Stocks in the Technology Giants Industry

by

Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not a member? Subscribe today. The first 14 days are free. Dividend Yield: Estimated on a forward-looking annualized basis. VBI: The Valuentum Buying Index, a timeliness indicator that overlays a price-to-fair-value estimate consideration. Fair Value Estimate: Derived by Valuentum’s enterprise valuation process. Dividend Cushion ratio: A ratio assessing the health of the dividend (the higher, the better). Data as of the date of this article. Individual company reports may have been updated subsequent to the publishing of this article, so please download a company’s stock and dividend report for its latest information and data. Note: The … Read more

Valuentum’s January 2023 Edition of Its Dividend Growth Newsletter

by

To download the January 2023 edition of the Dividend Growth Newsletter, please click here (pdf). ——————————————— About Our Name But how, you will ask, does one decide what [stocks are] “attractive”? Most analysts feel they must choose between two approaches customarily thought to be in opposition: “value” and “growth,”…We view that as fuzzy thinking…Growth is always a component of value [and] the very term “value investing” is redundant.                          — Warren Buffett, Berkshire Hathaway annual report, 1992   At Valuentum, we take Buffett’s thoughts one step further. We think the best opportunities arise from an understanding of a variety of investing disciplines in order to identify the most attractive stocks at any given time. Valuentum therefore analyzes each stock across a wide spectrum of … Read more

5 Top Stock Ideas for 2023!

by

By Brian Nelson, CFA With 2022 almost in the rear-view mirror, investors are expecting continued weakness into 2023. Millionaires are as bearish as they have been since the beginning of 2008, and we all know what happened during that year. Inflationary pressures coupled with substantially weakened consumer spending as a result of the collapse in the price of cryptocurrencies, traditional asset allocation models such as the 60/40 stock/bond portfolio, and ultra-high yielding stocks with payouts north of 9%-10% have most investors worried about what might be ahead in 2023. Still, investors have reason to be hopeful, in our view. The labor markets continue to hold up well, and the rate hikes that have pummeled equity, bond and real estate prices … Read more