Valuentum Exclusive Analysis for the Discerning Investor

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Feb 25, 2024

We Remain Bullish; Is This 1995 – The Beginning of a Huge Stock Market Run?
Image: Large cap growth stocks have trounced the performance of the S&P 500, REITs, and bonds since the beginning of 2023. We expect continued outperformance in this area of the market. We’re now roughly four years past the depths of the COVID-19 meltdown, where equities collapsed in February and March of 2020. As the markets began to recover through 2020, our long-term conviction in equities only grew stronger. We think the biggest risk for long-term investors remains staying out of the market on the basis of what could be considered stretched valuation multiples. As we outlined heavily in the book Value Trap, valuation multiples hardly tell the complete story about a company and often omit key long-term earnings growth, cash flow dynamics, and balance sheet health considerations. We remain bullish on equities for the long haul, and we think the next couple years will be incredibly strong. Our best ideas can be found in the Best Ideas Newsletter portfolio, Dividend Growth Newsletter portfolio, High Yield Dividend Newsletter portfolio, ESG Newsletter portfolio, and via the Exclusive publication as well as options idea generation.

Dec 23, 2023

12 Reasons to Stay Aggressive in 2024
From outperforming simulated newsletter portfolios to fantastic success rates in the Exclusive publication to option ideas and great income-oriented ideas and beyond, we continue to deliver across our simulated newsletter suite as our latest video outlines. It’s hard to know exactly what 2024 will bring in terms of a market return, but the internals of the stock market and the U.S. economy look great to us. The new bull market we’re in could last for years, and as a result, we are staying aggressive with many of our new ideas as we look to benefit from these favorable trends.

Nov 9, 2023

Disney’s Free Cash Flow Is Expected to Surge But A Strong Recovery Is Already Priced In
Image Source: Valuentum. On November 8, Disney reported improved fourth-quarter results for its fiscal 2023. Revenue advanced 5% on a year-over-year basis in the quarter, and the firm drove non-GAAP diluted earnings per share to $0.82 from $0.30 in the prior year period. The company’s Disney+ streaming service added 7 million core customers in the quarter, and its commentary that its streaming business would reach profitability in the fourth quarter of next fiscal year was welcome. Cost savings will be key, and the executive team expects free cash flow to grow significantly in fiscal 2024 versus the most recently reported year. All of this was great news, but a massive recovery in free cash flow is already factored into its price. Our $81 fair value estimate remains unchanged.

Sep 20, 2023

ICYMI: Questions for Valuentum’s Brian Nelson
Valuentum's President Brian Nelson, CFA, answers your questions.

Jul 24, 2023

AT&T: A High Yield Dividend Disaster, Now An ESG Nightmare
Image: AT&T’s shares continue to disappoint. We’re not interested in AT&T at all and believe that shares may remain under significant pressure until 1) material top-line growth resumes, 2) the firm’s capital-intensity lessens, 3) free cash flow improves significantly, 4) dividend increases resume 5) its leverage improves and 6) there is more visibility related to the potential contingent liabilities associated with lead-covered cables. We doubt all six of these things will happen, and therefore we believe the best days are likely behind AT&T.

May 23, 2023

Call Me Unconcerned
Image: Large cap growth has dominated returns the past five years. The Best Ideas Newsletter portfolio continues to have significant exposure to this area. We’re taking it slow this time of year. With the area of large cap growth nearly doubling since the beginning of 2018, trouncing the return of the broader market, dividend growth strategies, the area of small cap value and general REIT indices, it’s just hard to find much wrong with staying pat. The proliferation of artificial intelligence will likely propel big cap tech and large cap growth to new highs, while small cap value may continue to be weighed down by the banks--and dividend-oriented strategies may face continued pressure from rising interest rates and tired real estate markets. Things were a bit murky during 2022, but thanks for keeping the faith.

May 22, 2023

Nice! -- NASDAQ-100 Follows Through on Breakout
Image: NASDAQ-100 breaks through August 2022 resistance.

May 14, 2023

Disney’s 5-Year Returns Have Been Pitiful
Image: Since the beginning of 2018, Disney’s shares have fallen, while the S&P 500 has surged. Though we liked the company more recently, we no longer include shares in the Best Ideas Newsletter portfolio. Disney has its hands full with its feud with Florida Governor DeSantis, a weakening linear television market, and intense rivalries in the streaming market. All of this won’t be solved overnight and might even worsen. From where we stand, investors simply don’t need the complexity of the Disney story at this time, and the company’s 5-year returns tell the story of a troubled company. With shares of Disney largely fairly valued, we won’t be adding the company back to the Best Ideas Newsletter portfolio anytime soon.

May 4, 2023

Paramount Global Cuts Payout, Dividend Cushion Ratio Caught Another!
Image Source: Paramount Global. The Dividend Cushion ratio is not a perfect predictor of dividend health and the risks of a dividend cut, but it’s a pretty darn good one. On May 4, Paramount Global missed expectations for its first-quarter 2023 results on both the top and bottom line and cut its quarterly dividend to $0.05 per quarter (was $0.24). The company’s Dividend Cushion ratio, which considers its balance sheet as well as future expectations of free cash flow relative to future expected cash dividends paid, was -2.5 (negative 2.5). Any ratio below 1 indicates growing risk to the health of the dividend, while any materially negative (below 0) ratio indicates severe risk of a dividend cut in the longer run.

Feb 11, 2023

Disney: Iger’s Back, Peltz Concedes, Thousands of Jobs Gone, Dividend Coming Back Soon
Image Source: Valuentum. Disney has a lot of work to do. The company’s Parks, Experiences and Products segment has recovered nicely from the worst of the COVID-19 pandemic, but pricing increases may put the experience out of reach for many. Disney+ subscribers may have peaked given that the company will begin to cut costs to the bone in an effort to stop the billions in cash burn. Disney ended the year with $8.47 billion in cash and equivalents and a massive $48.4 billion debt load. Investors are happy that Bob Iger is back and with the company’s plans to re-instate a modest dividend later this year, but we think former CEO Bob Chapek may have gotten a bad shake. Chapek took over the week of the huge COVID-driven market crash in February 2020 and led the firm through a once-in-a-century pandemic, only to be shown the door before his investments could ever be given a chance of bearing fruit. There’s more to this story than we’ll ever know, and we doubt that Disney or Iger will have much to say about it.