Valuentum Exclusive Analysis for the Discerning Investor

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Aug 9, 2024

Paper: Value and Momentum Within Stocks, Too
Abstract: This paper strives to advance the field of finance in four ways: 1) it extends the theory of the “The Arithmetic of Active Management” to the investor level; 2) it addresses certain data problems of factor-based methods, namely with respect to value and book-to-market ratios, while introducing price-to-fair-value ratios in a factor-based approach; 3) it may lay the foundation for academic literature regarding the Valuentum, the value-timing, and ultra-momentum factors; and 4) it walks through the potential relative outperformance that may be harvested at the intersection of relevant, unique and compensated factors within individual stocks.

Jul 11, 2024

Delta Air Lines Speaks of Industry Fare Pressures
Image Source: Colin Brown. Delta Air Lines reported disappointing second-quarter results on July 11 with both revenue and non-GAAP earnings per share coming in lower than expected. The company put up record June quarter revenue, which reached $15.4 billion on an adjusted operating basis, up 5.4% from the same period a year ago, but the Street was looking for more. Earnings per share of $2.36 also missed the consensus forecast. Though airlines have largely rationalized capacity in recent years, fare pressures are starting to weigh on performance. We maintain our view that airlines are not long-term investments given their leverage to a cyclical economy and volatile jet fuel prices.

Jun 10, 2024

Update: Frequently Asked Questions About Valuentum Securities, Inc.
Valuentum (val∙u∙n∙tum) [val-yoo-en-tuh-m] Securities Inc. is an independent investment research publisher, offering premium equity reports and dividend reports, as well as commentary across all sectors/companies, a Best Ideas Newsletter (spanning market caps, asset classes), a Dividend Growth Newsletter, modeling tools/products, and more. Independence and integrity remain our core, and we strive to be a champion of the investor. Valuentum is based in the Chicagoland area. Valuentum is not a money manager, broker, or financial advisor. Valuentum is a publisher of financial information. We address a number of questions from both subscribers and visitors to our site.

Apr 10, 2024

Delta Reports Strong March Quarter; Airline Stocks are Too Risky for Our Taste
Image Source: Colin Brown. Delta’s quarter ending in March was solid, and its full year outlook was encouraging. In general, however, we don’t like airline equities. The extreme ticket price transparency creates an ultra-competitive environment, and overcapacity is always a concern. We view airlines as merely trading vehicles on the health of the global economy and the trajectory of crude oil prices. Delta is operating well, but it will never be able to escape the challenges of its industry, and for those reasons we remain on the sidelines with respect to shares.

Mar 11, 2024

How Some Members Use Valuentum’s Investment Services
We serve a wide variety of investors, including dividend growth investors, value investors, and pure Valuentum investors, among others. Many different types of investors and professionals use our research and financial analysis in a whole host of applications from individual stock-selection to the evaluation of closed-end funds to an overlay in a money-management setting and beyond. The Best Ideas Newsletter portfolio seeks to find stocks that have good value and good momentum characteristics and typically targets capital appreciation potential over a longer-term horizon. The Dividend Growth Newsletter portfolio seeks to find underpriced dividend growth gems that generate strong levels of free cash flow and have pristine, fortress balance sheets, translating into excellent Valuentum Dividend Cushion ratios. The High Yield Dividend Newsletter portfolio seeks to find some of the highest-yielding stocks supported by strong credit profiles and solid business models, but not always robust traditional free cash flow. Ideas in this newsletter offer higher-yielding opportunities, but also much higher capital and income risk. We also offer a full suite of products to financial advisers (gold level) that range from a more extensive Excel-based screening tool (the DataScreener) to 'Ideas' and 'Dividend' publications that are released on a quarterly basis. Our research product includes hundreds of stock reports, fair values, fair value ranges, associated commentary, as well as dividend reports with Valuentum Dividend Cushion ratios and expected dividend growth rates. Silver and gold-level members can add the Valuentum Exclusive or additional options commentary/ideas to their plans. The Exclusive publication is a part of the institutional (platinum) level membership.

Jan 17, 2024

In the News: MSFT, AAPL, SAVE, ALB
Image: Microsoft and Apple have been strong performers the past several years, with Microsoft recently surpassing Apple’s market capitalization to become the largest entity in the S&P 500. The start of trading in 2024 hasn’t been tracking the way that we like, but it’s way too early to sound the alarm on any sort of correction. The employment markets remain very healthy, both as it relates to unemployment and wage gains, while inflation looks to be largely under control, with the market expecting a number of rate cuts during 2024. We continue to like the areas of big cap tech and large cap growth in the current market environment.

Jan 8, 2024

Boeing In Negative Headlines Again; Part of 737 Max Fuselage Blows Out During Commercial Flight
Image: Boeing's shares have been quite volatile the past couple years. On January 6, Boeing received some more bad news. Part of a fuselage installed on one of its new eight-week old 737 Max 9 aircraft blew out on an Alaska Airlines flight. Boeing had been working hard to get back on track with customer perception of the safety of its 737 MAX line-up, and we view the incident as yet another hiccup in the firm’s relations with the public.

Nov 4, 2023

Booking Holdings Is a Net-Cash-Rich, Free-Cash-Flow Generating Powerhouse!
Image: Booking Holdings remains an asset-light, free-cash-flow generating powerhouse. Booking Holdings ended the September quarter with a modest net cash position. Cash and cash equivalents totaled ~$13.3 billion and short-term investments came in at $624 million, a sum that was greater than its short-term debt load of ~$1.9 billion and long-term debt of ~$11.9 billion. The company hauled in ~$6 billion in cash flow from operations during the first nine months of 2023 and only spent $251 million on property and equipment, good for significant free cash flow generation. Its free cash flow margin so far in 2023, as measured by free cash flow divided by sales, was an impressive ~35%, showcasing just how efficient Booking Holdings is in converting its top line to cold hard cash. Our $3,164 per share fair value estimate remains unchanged at this time.

Aug 4, 2023

Best Idea Booking Holdings Soars!
Image: Booking Holdings’ free cash flow conversion is about as good as it gets. The company remains a key idea in the Best Ideas Newsletter portfolio. Image Source: Booking Holdings. Booking Holdings fits the mold of the type of companies that we’re looking for in this market environment. The company has an asset-light business model that is tied to secular growth trends, all the while it boasts a net cash position and significant free cash flow generation. The company’s outlook also speaks to continued strength as it relates to leisure demand, a key data point suggesting that the broad economic environment remains resilient despite rate increases and the erosion of excess consumer cash savings built up during the COVID-19 pandemic. The quarterly report was welcome news.

Dec 14, 2022

Union Pacific Outperforming North American Rail Traffic Trends But Facing Inefficiencies and Inflation Hurdles
Image Source: Union Pacific. The rail industry may have avoided a labor strike, but North American rail traffic remains under pressure, while many operators are struggling with inflationary pressures and operational inefficiencies. Union Pacific remains our favorite way to play the rails, but 2022 has been a difficult year for the firm, with free cash flow coming under pressure as capital investments have soared so far in 2022. Union Pacific garners an ‘A’ rating by Moody’s, Fitch and S&P, so we’re not too worried about its large net debt position. Shares yield ~2.4% at the time of this writing, but we’re not pulling the trigger.