Valuentum Exclusive Analysis for the Discerning Investor

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Oct 17, 2024

Taiwan Semiconductor Benefiting from Strong Smartphone and AI Demand
Image: Taiwan Semiconductor released better than expected results. Taiwan Semiconductor ended the quarter with NT$2,167.6 billion in cash and marketable securities against long-term interest-bearing debt of NT$936.16, showcasing a nice net cash position. Free cash flow in the quarter advanced to NT$184.91 billion from NT$68.03 in the year-ago period. Looking to the fourth quarter of 2024, revenue is targeted in the range of US$26.1 billion and US$26.9 billion (consensus was at US$25.02 billion), while gross profit margin and operating profit margin, based on the exchange rate assumption of 1 US dollar to 32 NT dollars, are expected to be 57%-59% and 46.5-48.5%, respectively. We liked Taiwan Semiconductor’s results and outlook, and the company remains a key idea in the ESG Newsletter portfolio.

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.

Jan 24, 2024

Earnings Roundup: NFLX, ASML, T, ABT
Image: Netflix’s substantially improved free cash flow has made it a clear winner in the streaming wars. Image Source: Netflix. Netflix has won the streaming wars and continues to throw off material free cash flow as it lands incremental deals, the latest for WWE Raw. ASML is one of the most prolific innovators in the semiconductor industry, and its quarterly net bookings in the fourth quarter reveal an exciting future, even as revenue is forecast to be flat in 2024. AT&T's earnings outlook for 2024 disappointed, and rising capital spending will pressure free cash flow in 2024. Dividend King Abbott Labs continues to drive strong organic growth rates, exclusive of COVID-19 related weakness, and we expect years of future dividend growth at the company.

Sep 4, 2023

Report Updates -- Did You Throw the Baby Out with the Bathwater?
The markets are finally making sense again, and we remain huge fans of big cap tech and the stylistic area of large cap growth. Though entities are starting to register high ratings on the Valuentum Buying Index, we’re not pulling the trigger on either Alibaba or Korn/Ferry in light of the tremendous risks related to U.S-China relations for Alibaba and the lack of fundamental catalysts for Korn/Ferry. That said, should these firms’ technical and momentum indicators shape up, their equity prices could really catch a bid, in our view. The newsletter portfolios continue to deliver in a big way, not only generating outperformance relative to the market-cap weighted S&P 500 during 2022, but also positioning well for the boom in big cap tech and the stylistic area of large cap growth that has materialized in 2023. We’ve said it before, and we’ll say it again: Don’t throw the baby out with the bathwater.

Aug 23, 2023

“A New Computing Era Has Begun” -- Nvidia Delivers Yet Again
When we first wrote that Nvidia would power this market higher back in May, the firm had just put up one of the most prolific earnings beats I had ever seen. I’d have to go back almost 20 years to the invention of Apple’s iPod click-wheel technology to remember something that came close. Well, on August 23, Nvidia just put up another monster quarter, this one the second of its fiscal year 2024, beating top-line and bottom-line consensus estimates by a huge margin for the period ending July 30. We’ve raised our fair value estimate of Nvidia considerably following the blockbuster second-quarter performance and third-quarter outlook, released today, and the race is on to adopt artificial intelligence [AI].

Jul 19, 2023

Top Dividend-Related News: MSFT, AAPL, ASML
Image: Microsoft’s shares hit a record high in July! Dividend growth giants Microsoft and Apple release news within the realm of artificial intelligence, while ASML Holding continues to expect a breakneck pace of revenue expansion during 2023.

Jun 5, 2023

ALERT: Going to “Fully Invested” in the Best Ideas Newsletter Portfolio
Image: Since the publishing of the first edition of the book Value Trap, the stylistic area of large cap growth (SCHG) has meaningfully outperformed both the equal-weight S&P 500 (SPY) and small cap value (IWN).With the debt-ceiling debate behind the markets, the regional banking crisis largely in the rear-view mirror, and the Fed winning the fight against inflation, a continuation of the strength in the markets as witnessed from the October 2022 lows can probably be expected. We're going to "fully invested" in the Best Ideas Newsletter portfolio today and expect to do the same in the Dividend Growth Newsletter portfolio and High Yield Dividend Newsletter portfolio soon.

May 25, 2023

Nvidia Rockets Higher to Propel Large Cap Growth
Image: Nvidia powers higher after releasing better-than-expected second-quarter fiscal 2024 guidance. The company continues to be a driver behind the outperformance of large cap growth as a stylistic area. We haven’t seen a quarterly guidance beat like this since Synaptics put up a monster quarter when Apple started using its innovative click-wheel technology in the first-generation iPod, almost 20 years ago. Nvidia Corp.'s outlook for the second quarter of its fiscal 2024 was phenomenal thanks to tremendous interest in its chips that power artificial intelligence [AI]. We expect a material increase in our fair value estimate of Nvidia, but shares remain quite pricey, in our view. Revenue during Nvidia’s fiscal second quarter is expected to be ~$11 billion versus consensus that had been looking at ~$7 billion, implying a forward outlook more than 50% better than what the Street was looking for. Interestingly, Synaptics’ click-wheel technology started the wave of Apple products, which have been the go-to tech platform for years, and Nvidia may very well be the driving force behind AI proliferation, the next great technology platform.

May 5, 2023

Apple’s Second-Quarter Fiscal 2023 Results Were Good Enough
Image Source: Valuentum. On May 4, Apple reported second-quarter results for its fiscal 2023 for the period ending April 1, 2023, that were slightly better than consensus forecast, but we’re viewing the report as mixed. Revenue dropped 2.5% in the quarter on a year-over-year basis as better-than-expected resilience in iPhone sales could not offset weakness in Mac and iPad performance, and its quarterly EPS of $1.52 was unchanged from last year’s mark. Revenue in the company’s Services business jumped 5.4%, and the iPhone maker announced a $90 billion buyback program as it upped its quarterly dividend by more than 4%, to $0.24 per quarter. We plan to make a few tweaks to our valuation model of Apple, but we don’t anticipate a material change to our fair value estimate.

Nov 13, 2022

ASML Launches Big Buyback; Lithography Systems Well Positioned for Demand Growth
Image: ASML has been one of the most successful semiconductor companies thanks in part to the firm’s advanced lithography systems that continue to meet customer demands for size and cost efficiencies. Image Source: ASML. We think ASML Holding is in a sweet spot in the semiconductor space as its lithography systems position the industry well along the path of Moore’s Law. Strong past investments have given it a leadership position, and we expect ASML to capture a significant amount of its addressable market from smartphones to personal computing and beyond, all the while it pays a dividend and buys back stock along the way. A continued focus on research & development and capital spending, while maintaining a strong and flexible balance sheet should be expected. The firm’s recent Investor Day was a positive catalyst for shares and eased the worst of the concerns regarding the intermediate-term impact of Sino-American tensions on the semiconductor space. We continue to like shares of ASML Holding.