Valuentum Exclusive Analysis for the Discerning Investor

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Jan 28, 2024

What Causes Fair Value Estimates to Change?
Image: A screenshot of the discounted cash-flow learning tool for individual investors. So you noticed a fair value estimate changed, and you weren’t sure why? This article is for you.

Jan 9, 2023

Exact Sciences: Fast-Growing Molecular Diagnostic Company But Huge Risks
Image Source: Exact Sciences. Though Exact Sciences is experiencing strong top-line momentum in its business at the moment given its recent upward guidance revision for 2022, its net losses remain huge while its net debt position remains large. We also can’t forget that Exact Sciences recently lowered its full-year 2022 guidance in August, so visibility behind its operations is also somewhat limited, in our view. That said, Exact Sciences’ stool-based Cologuard test has a massive long-term market opportunity, but competition from procedure-based detection technologies and other potential new entrants looking to develop their own stool-based colorectal cancer tests means its long-run outlook is just too murky for us to get excited about shares. Regardless, Exact Sciences' equity has soared more than 20% to start 2023, and we’ve taken notice of the speculative pop.

Oct 26, 2022

Microsoft, Alphabet Calendar 3Q Reports As Expected; Pressured By Weakening Economy
Image Source: Abi Begum. We continue to be huge fans of large cap growth and big cap tech equities over the long haul, as their equity prices will likely slingshot back on the other side of the current economic malaise. Microsoft and Alphabet continue to generate gobs of free cash flow and their balance sheets are absolutely remarkable, boasting huge levels of net cash. We continue to like Microsoft and Alphabet in the simulated newsletter portfolios. Please note that Meta Platforms was removed from the simulated Best Ideas Newsletter portfolio on October 18.

Oct 7, 2022

ICYMI: Things Have Changed Fast; Inflation and the Fed Have Damaged the Economy
Image Source: EpicTop10.com. Things have changed fast. Inflation has turned from a positive catalyst in 2021 into a negative catalyst in 2022, all the while the 10-year Treasury rate has soared. We’ve yet to see the impact from a massive negative wealth effect from alternatives, to stocks/bonds, to the U.S. housing market, and the European financial system could eventually need life support as the U.K. bails out pension funds and the sharks start swarming around large European financial institutions. The writing is on the wall for tough times to come in 2023, and things will get worse before they get better. Buckle up because we’re going to be in for a wild ride in the coming 6-12 months, and maybe longer.

Sep 28, 2022

Things Are Bad Out There
The Bank of England’s intervention to stem what might have turned into a “run on the bank” dynamic for pension funds in the country amid a collapsing pound has given rise to the view that the Fed may start to slow its rate of increases amid global uncertainty. We think it’s too early to tell. From our perspective, the Fed remains committed to stomping out inflation, something that it may not truly be able to do, given that interest rate hikes may be too blunt of an instrument to stymie food cost inflation, which remains one of the the biggest inflationary headwinds that is hurting consumer budgets. What is happening on the global stage is quite concerning, and we remain bearish on the equity markets. The bull case may very well be a deep recession in the U.S., where dollar cost averaging in the U.S. markets could be had, followed by sharp interest rate cuts by the Fed, and a return to all-time highs. This is not a time to lose interest, but a time to pay even closer attention to your investments. What you do over the next couple years will have implications on your portfolio 5, 10, and 20 years forward. Let’s keep focused on preserving and building long-term wealth!

Aug 28, 2022

We've Suspended Coverage of Stocks in the Disruptive Innovation Industry
Image Source: Virgin Galactic. --- We've suspended coverage of stocks in the 'Disruptive Innovation' industry. Order the Exclusive publication to gain access to idea generation that covers some of the most innovative stocks. As a member to the Exclusive publication, you'll receive one income idea, one capital appreciation idea, and one short idea consideration each month! --- The ‘Disruptive Innovation’ industry is unique in almost every way. The companies included don’t necessarily share a similar traditional industry or sector make-up, but they do share one big thing in common: They continue to disrupt the traditional way of doing things. Carvana is changing how consumers buy used cars, Roku is leading the streaming charge against linear TV, Teradyne's industrial robotics technology is fascinating, Beyond Meat is working to alter the substance of the meat products industry, Virgin Galactic wants to make spaceflight accessible for private individuals, Uber is changing how we think about getting from point A to point B through ridesharing, Penn National is aggressively expanding into sports betting with its investment in Barstool Sports, CRISPR Therapeutics' revolutionary gene-editing technology may offer a path to curative solutions for the worst diseases, Wayfair is disrupting how we buy home goods, ETSY is carving out a niche online marketplace in craft items, while Zoom Video has come of age during the outbreak of COVID-19. Others included in this list of stock reports have been around for a while, but are still innovating to meet customer needs. Monster Beverage continues to reinvent the energy drink market, Boston Beer has found new life with its portfolio of new brands, and even GameStop is seeking to find its place after the meme-stock frenzy. There are other companies in this industry and sure to be many more added in the future.

Apr 14, 2022

We're Still Bullish; GDP Continues To March Ever Higher!
Image: "Gross domestic product (GDP), the featured measure of U.S. output, is the market value of the goods and services produced by labor and property located in the United States." Image Source: BEA. We believe there will be continued strength in the equity markets during the back half of this year and into 2023. There are myriad headwinds to this bullish underlying thesis, but big-cap company fundamentals remain strong, and we think this will become evident during first-quarter 2022 earnings season, which is already upon us.

Mar 14, 2022

Valuentum Weekly: Yields on New Series I Savings Bonds Have Soared!
The Dow Jones, S&P 500 and NASDAQ futures are all indicated up Sunday night (March 13), but that may not mean much when trading kicks off tomorrow. The start to 2022 has been one of the worst stretches during the past decade, but broader market indexes still aren't down much, even after factoring in several expected rate hikes by the Fed and economic sanctions on Russia due to the war in Ukraine. According to data from Seeking Alpha, the S&P 500 (SPY), Dow Jones Industrial Average (DIA), and Nasdaq (QQQ) are off ~12%, ~10%, and ~19% so far this year, respectively. However, this weakness compares to (and is inclusive of) incredible 5-year price-only returns on the SPY, DIA, and QQQ of ~77%, ~58%, ~146%, respectively, so it's hard for stock investors to be disappointed in much of anything, even if all they were able to do was match the returns of the S&P 500 the past 5 years. Many, however, unfortunately, diluted those 5-year returns with hefty bond and international exposure and sometimes large AUM fees, so the weakness in 2022 is probably more painful for some than perhaps it should be. In any case, we remain bullish on stocks for the long run, with a heavy bent toward large cap growth and big cap tech with tactical overweight "positions" in big cap energy.

Mar 7, 2022

GoodRx’s Modest Q4 Miss, Slowing Revenue Growth Expectations Send Shares Tumbling
Image: Many speculative areas have faced tremendous pressure in recent months from new issues to entities tied to the trend of disruptive innovation. Image Source: TradingView. GoodRx reported weak fourth-quarter 2021 results and issued top-line guidance for 2022 that has reset the market’s long-term growth expectations for the firm much lower. The company’s EBITDA margin outlook also speaks to continued competitive pressures at the company that may only intensify with Amazon a key player in the online pharmacy space. Though GDRX’s free cash flow profile and balance sheet remain healthy, the company’s little to no expected GAAP profits, slowing expected revenue growth, and mounting competition speak to an uphill battle ahead. GDRX’s recently announced $250 million stock buyback program will eat into its healthy balance sheet and may only provide a dead-cat bounce from today’s levels (in the mid-teens per share).

Mar 7, 2022

Valuentum Weekly: Outsized Energy Exposure Continues to Buoy Newsletter Portfolios
Image: Light crude oil futures once traded for roughly -$40 (negative $40) during the COVID-19 crisis, but have now rocketed to more than $120 in recent trading. Image Source: TradingView. The S&P 500, as measured by the SPY, is down 9% year-to-date, a modest pullback, in our view, particularly in light of the fantastic performance the past few years. Though not necessarily welcome, a down year every now and then for the broader market indexes and a modest bear market can only be expected, at times. The Dow Jones Industrial Average, as measured by the DIA, is down more than 7% year-to-date (not too bad), while the Nasdaq--as measured by the QQQ--and 'disruptive innovation' stocks--as measured by the Ark Innovation ETF--have fallen more than 15% and 36%, respectively, so far this year (data from Seeking Alpha). We like how the simulated newsletter portfolios are positioned. Energy resource prices continue to surge (with WTI crude oil prices skyrocketing north of $120 per barrel at last check), and they are bringing energy equities higher along with them. The simulated Best Ideas Newsletter portfolio, simulated Dividend Growth Newsletter portfolio, and simulated High Yield Dividend Newsletter portfolio are all materially overweight energy equities relative to the energy sector’s weighting in the S&P 500, and we expect to maintain such high tactical "exposure." Both the Energy Select Sector SPDR ETF and the Vanguard Energy ETF soared to 13-year highs last week. Our favorite energy ideas are the largest two energy majors, Exxon Mobil and Chevron, and both have hefty 'weightings' in each of the three aforementioned simulated newsletter portfolios. Russian equities, as measured by the RSX, are down nearly 80% so far this year, and we're pleased to say that we've largely avoided the fall out. We continue to like the broader areas of U.S.-heavy, large cap growth and big cap tech when it comes to long-term secular exposure, and we continue to like energy as a tactical overweight for the foreseeable future across the simulated newsletter portfolios, as much as we did even prior to the huge advance in energy resource prices and the invasion of Ukraine by Russia.