Valuentum Exclusive Analysis for the Discerning Investor

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Jan 20, 2023

Energy Pipelines: What a Difference A Few Years Have Made!
Image: Midstream energy companies have significantly improved their free cash coverage of their payouts in recent years. We’ve taken note. Source: Relevant 10-Q filings. We can hardly believe how much better things are looking for midstream pipeline companies these days, particularly as it relates to free cash flow coverage of their payouts, but also as it relates to improved financial transparency. Many midstream MLPs continue to be saddled with huge net debt positions, but what a difference a few years have made! Capital discipline is making their dividends/distributions incrementally more attractive, and we’ve taken note.

Dec 22, 2022

Be Careful With Celebrity Endorsement of Investment Products
Image Source: EpicTop10.com. Have you ever wondered why so many trust the TV for financial advice or stock tips? You guessed it: It comes back to "brain science" or the concept of familiarity. When we see a celebrity or our favorite stock guru on the television, it arouses our emotions and connects us with the idea, making the experience more memorable. The brain tends to treat our favorite newscaster or celebrity as a trusted, familiar friend, and therefore we translate those feelings into expertise and a "valid" endorsement. Be sure to use caution with celebrity endorsements of investment products, however.

Nov 4, 2022

Dividend Increases/Decreases for the Week of November 4
Let's take a look at firms raising/lowering their dividends this week.

Nov 1, 2022

Enterprise Products Partners Reports Strong 3Q, Impressive ~7.5% Distribution Yield
Image Source: Enterprise Products Partners. The Alerian MLP ETF has faced considerable pressure during the past 10 years, generating a paltry annualized return, but shares of many constituents have improved during 2022 as energy resource prices have bounced back. Though we generally shy away from MLPs, more generally, Enterprise Products Partners is one of our favorites given the increased transparency it provides to investors when it comes to cash-flow metrics. Since its IPO, Enterprise Products Partners has raised its distribution 24 years in a row. Shares yield ~7.5% at this time.

Oct 23, 2022

Must Watch: MPT Failures and High Yield Dividend Breakdown Spiral!
Valuentum's President of Investment Research breaks down what went wrong with modern portfolio theory in 2022, and why investors that have been lured into "sucker" yields may have just experienced permanent capital impairment with their retirement savings. A two-part video series.

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.

Nov 5, 2021

Dividend Increases/Decreases for the Week November 5
Let's take a look at companies that raised/lowered their dividend this week.

Aug 6, 2021

ExxonMobil’s Great Earnings Report and Promising Growth Outlook
Image Shown: An overview of ExxonMobil Corporation’s strategy to generate shareholder value going forward. Image Source: ExxonMobil Corporation – Second Quarter of 2021 Earnings IR Presentation. ExxonMobil’s financial performance is on the upswing, and its operational performance has been firing on all cylinders of late. We continue to be big fans of both ExxonMobil’s capital appreciation upside and dividend growth potential. Our fair value estimate for ExxonMobil under our “base” case scenario sits at $83 per share, well above where shares of XOM are trading as of this writing. The company’s Dividend Cushion ratio sits near parity at 0.9, and we rate both ExxonMobil’s Dividend Growth and Dividend Safety ratings as “GOOD” given its impressive cash flow generating potential. Shares of XOM yield a nice ~6.0% as of this writing.

May 3, 2021

The Real Reasons Why Buffett Wants You in Index Funds
Image Shown: Since mid-June 2015, on a price-only basis, the S&P 500 (SPY) has nearly doubled, while shares of Kinder Morgan have nearly halved. In Morgan Housel’s book The Psychology of Money, chapter 16 leads in with “Beware taking financial cues from people playing a different game than you are.” The people on CNBC are playing a different game than you, and so is Warren Buffett. Buffett’s principles on stock selection are golden, but you must understand that he is near the top of the Forbes’ Billionaires List. He absolutely should be taking his own advice and indexing! With the threat of long-term inflation and price-agnostic trading, the average American, even with a few million in the bank, is not so lucky. Keep your game sharp.

Jan 11, 2021

Energy Sector In Shambles, Looks to Recover But Headwinds Persist
Image Source: ConocoPhillips – November 2019 Analyst and Investor Meeting IR Presentation. Though raw energy resource pricing is on the rebound, the outlook for the oil and gas industry remains stressed. Global demand for oil and related refined petroleum products remains subdued due to headwinds generated by the ongoing coronavirus (‘COVID-19’) pandemic. The OPEC+ oil cartel has responded by pledging to keep a significant amount of oil output off the market for an extended time. However, raw energy resource prices need to go much higher and be sustained at elevated levels before the space could become attractive from a longer-term perspective. In our view, the US upstream industry (specifically those in the shale patch) need WTI to move and stay north of $60 per barrel to be in a position to generate meaningful free cash flow while also investing enough to maintain their production bases. We think the dividends at the oil majors may be at risk, even Exxon’s, and we include two high-risk midstream stocks in the High Yield Dividend Newsletter portfolio to capture a relatively benign risk-reward scenario when it comes to their respective yields. We maintain a cautious view on the MLP business model, more generally, however. For now, we are keeping a close eye on the energy sector considering things are slowly moving in the right direction. However, given the collapse in raw energy resources pricing witnessed during the first half of 2020, the industry still has a long way to go before it is out of the woods, so to speak.