Valuentum Exclusive Analysis for the Discerning Investor

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Jan 22, 2024

Chinese Equities Still Uninvestable
Image: Large cap Chinese equities are back to levels first reached in 2005, almost two decades ago. Things have been so bad in Chinese equities that China’s largest broker has even taken steps to curb short sales. For the past 52 weeks, Alibaba’s shares have fallen more than 41%, Baidu’s shares have dropped more 22%, JD.com’s shares are off more than 63%, Bilibili’s shares are down more than 65%, while Tencent Holdings has fallen more than 30%. Though the steep declines in shares of Chinese equities may attract some bottom fishing, we’re not interested in any Chinese exposure at this time. We continue to like ideas in the newsletter portfolios.

Sep 13, 2023

Apple’s Big “Wonderlust” Event Is Business as Usual
Image Source: Apple. Apple Inc. hosted its widely-anticipated “Wonderlust” event. The market was anticipating several new products, and Apple delivered. The firm’s iPhone 15 Pro, iPhone 15, Apple Watch Series 9, and Apple Watch Ultra 2 will go a long way to retaining share in smartphones and wearable devices, but the company opted to leave prices unchanged. Many had been expecting a price increase, but we’re not reading too much into Apple’s decision to leave them unchanged, given economic uncertainty in the U.S., Huawei’s release of its latest phone (the Mate 60 Pro), and rising geopolitical tensions between the U.S. and China.

Apr 19, 2023

1Q 2023 Earnings Coming in Better Than Feared Thus Far
Image: We view valuation as a range of probable fair value outcomes. Our updated fair value estimate for Booking Holding stands north of $3,000, while shares are trading at less than $2,700. First-quarter 2023 earnings season has been coming in better than feared, in our view, and bank earnings have not spooked the market as many may have thought they would. But again, any banking crisis takes far more than just a month or two to work through the system, and in the event another shoe drops – whether in Europe or in U.S. commercial real estate or U.S. housing – things could get ugly for the banking sector. We continue to prefer equities over bonds, and as was shown once again during SVB Financial meltdown, the Fed was there once again to bail out the “market” and prevent contagion at any cost. With roughly 10% of the S&P 500 reporting first-quarter 2023 earnings so far, many companies have been beating consensus estimates.

Apr 11, 2023

Markets Don’t Look Bad
Image: The market-capitalization weighted S&P 500 continues to hold its January breakout, while support held in mid-March. The market-capitalization weighted S&P 500 is no longer in a downtrend, and while the regional banking crisis gave investors pause, we’d have to say the markets don’t look bad. From a technical standpoint, the SPY broke through its downtrend in January, while it held support in mid-March. If the S&P 500 can break through the early February near-term highs, technically, things are looking quite good for the beginnings of this nascent market leg-up. It’s been a long road to get to what looks like a “bottom,” but we might have witnessed it in October of last year.

Dec 21, 2022

Nike’s Weak Earnings Growth, Markdowns, and Lofty Inventory Levels Still Telling of a Struggling Consumer
Image Source: Valuentum. Nike’s second-quarter fiscal 2023 earnings report, released December 20, revealed strong revenue growth, but concerns lurked beneath the surface. Gross margin pressure, markdowns, lofty inventory levels, and a decline in reported sales in China were among the many concerns. Nike’s strong brand and close ties with consumers, however, offer key competitive advantages, and while consumer discretionary spending is facing considerable pressure in the near term, Nike remains a strong long-term global story, in our view. Shares yield ~1.3% and are trading modestly above the high end of our fair value estimate range at the time of this writing.

Dec 4, 2022

Apple iPhone Supply Disruptions Not Likely to Hurt Markets with Overall Holiday Sales Reportedly Strong
Image: Holiday sales are expected to expand ~2.5% in 2022 over very strong growth in 2021 and 2020. Image Source: Adobe. Apple's sales of the iPhone 14 Pro and iPhone 14 Pro Max will come in lower than expected this holiday season due to labor unrest in Zhengzhou, but holiday sales for 2022 overall look fairly solid with Adobe Analytics estimating 2.5% growth over 2021, which, itself, was a fantastic year. A prior warning about holiday sales from Target Corp. appears to have been overblown given the sales strength witnessed during Black Friday and Cyber Monday across the retail landscape this year. It may be too early to say that the markets have definitely bottomed as economic data remains inconclusive, but holiday sales so far in 2022 and an overall resilient job market are giving investors something to cheer about in what has turned into an otherwise loathsome year.

Oct 24, 2022

Chinese Stocks Bludgeoned!
Image: Large cap Chinese equities are now back to levels first reached more than 15 years ago on a price-only basis, to levels first attained in early 2006. The stakes have never been higher on the world stage as geopolitical uncertainty between the U.S. and China continues to escalate. Shares of Chinese equites have been bludgeoned, now back to levels first reached in early 2006, some 15 years ago. The fallout has taken some of the best investors with it, legends such as Charlie Munger, whose shares in BABA hover near all-time lows. We don’t see Chinese equities as “investable” these days, and we’re steering clear of direct exposure in the simulated newsletter portfolios at this time.

Jul 7, 2022

2022 Oil & Gas Market Update: “The Outlook for Crude Oil Prices Remains Quite Bullish”
In our view, the outlook for crude oil prices remains quite bullish which in turn should enable Chevron and Exxon Mobil, two of our favorite newsletter portfolio ideas, to churn out “gobs” of free cash flow over the coming quarters. Additionally, both Chevron and Exxon Mobil have substantial exposure to natural gas prices, in part through their enormous LNG export facilities in Australia, which should further support their cash flow generating abilities. We will caution here that a key downside risk the global energy complex faces is potential demand destruction as consumers adjust their lifestyles accordingly to reduce their energy and fuel bills. With that in mind, we have yet to see energy demand falter in a meaningful way, though we are keeping a close eye on the state of the global economy.

Jun 28, 2022

Nike’s Gross Margin Falls, Inventory Leaps in Fourth Quarter Fiscal 2022
Image Source: Valuentum. Nike CEO John Donahoe may have said it best in its fourth-quarter fiscal 2022 press release: “Nike’s results this fiscal year are a testament to the unmatched strength of our brands and our deep connection with consumers. Our competitive advantages, including our pipeline of innovative product and expanding digital leadership, prove that our strategy is working as we create value through our relentless drive to serve the future of sport.” What more can we say about this great company. We like its financials quite a bit, fourth-quarter fiscal 2022 earnings came in better than expected, the company is navigating supply chain issues, inflationary pressures, and weakness in Greater China quite well, and it just launched a new massive buyback program to take advantage of its underpriced stock. Nike boasts an impressive Dividend Cushion ratio of 3.8, and we’re reiterating our $139 per share fair value estimate on shares. Shares yield ~1.1% at the time of this writing.

Apr 29, 2022

Apple Reports Record Services Revenue in Calendar First Quarter 2022, We Still Love Shares!
Image Shown: Apple Inc put up another strong earnings report for the quarter ended March 2022. We continue to like Apple as an idea in our newsletter portfolios. On April 28, Apple reported earnings for its second quarter of fiscal 2022 (period ended March 26, 2022) that beat both consensus top- and bottom-line estimates by a wide margin. Apple also increased its dividend by 5% on a sequential basis and authorized an additional $90.0 billion in share repurchases in conjunction with its latest earnings update. We are big fans of Apple and include shares of AAPL as an idea in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios. Shares of AAPL yield ~0.5% as of this writing and we see room for Apple to push through substantial payout increases going forward. Additionally, the top end of our fair value estimate range sits at $204 per share of AAPL, well above where Apple’s stock price is trading at as of this writing indicating it has ample capital appreciation upside potential as well.