Valuentum Exclusive Analysis for the Discerning Investor

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Dec 30, 2020

Recent Data Indicates US Consumer Spending Holding Up Well, Online Sales Surging
Image Shown: As of this writing, the S&P 500 (SPY) appears ready to end 2020 on a high note, supported by the resilience of the US consumer. The ongoing coronavirus (‘COVID-19’) pandemic accelerated the shift towards e-commerce, and that change has long legs. Retailers that previously invested in their digital operations and omni-channel sales capabilities were able to capitalize on this shift while those that relied heavily on foot traffic were hurt badly. Numerous retailers went under in 2020 including J.C. Penney and Neiman Marcus. Holiday season shopping data indicates that US consumer spending was frontloaded and grew modestly in 2020, aided by surging e-commerce sales, which advanced nearly 50% on a year-over-year basis. The recent passage of additional fiscal stimulus measures in the US supports the outlook for the domestic economy going forward. Our fair value estimate range for the S&P 500 of 3,530-3,920 based on normalized economic conditions and dovish Fed/Treasury actions, released June 12 when the S&P 500 was trading ~3,000, remains unchanged. We remain bullish on stocks for the long run.

Dec 18, 2020

Omni-Channel Strategy at Dick’s Sporting Goods Makes It a Long-Term Dividend Growth Idea
Image Source: Dick’s Sporting Goods Inc – Third Quarter of 2020 Earnings Infographic. The ongoing coronavirus (‘COVID-19’) pandemic, due to the desire of households to socially distance, has seen a meaningful amount of consumer spending shift to e-commerce platforms. Retailers that invested heavily in their online operations, while also bulking up their omni-channel sales capabilities, were in a much better position when the pandemic hit than those that had to rely largely on their physical footprint. Over the past year, “contactless” delivery options have become much more popular. That includes fulfillment options such as curbside pickup and in-store pickup (usually in specially designated areas), where consumers purchase goods online and then travel to the relevant physical store location to acquire those products. Demand for home delivery services has surged as well. On November 27, we added Dick’s Sporting Goods to the Dividend Growth Newsletter portfolio to gain exposure to a high-quality retailer with strong omni-channel sales operations, and the rise of e-commerce more broadly. In this note, let's focus on Dick’s Sporting Goods’ operational improvements and e-commerce strategy.

Nov 25, 2020

Dick’s Sporting Goods’ 2%+ Dividend Yield Is Solid
Dick’s Sporting Goods put up impressive third-quarter results that showed strong sales performance across both e-commerce and brick-and-mortar. E-commerce/digital/online sales continue to soar across the broader retail arena. Dick’s Sporting Goods’ gross and merchandising margins were healthy during its third quarter, and its inventory is clean as the sporting goods retailer heads into the all-important holiday season. We’re big fans of Dick’s Sporting Goods’ tremendous free cash flow generation and its balance sheet health. For dividend growth investors, Dick’s Sporting Goods offers a compelling combination of a 2%+ dividend yield and an impressive 3.2 Dividend Cushion ratio at the time of this writing.

Nov 21, 2020

Target Reaches All-Time Highs
Image Shown: Shares of Target Corporation are now trading near their all-time highs as of this writing. Shares of Target Corp recently reached an all-time high after the company reported third quarter earnings for fiscal 2020 (period ended October 31, 2020) on November 18 that smashed past consensus estimates on both the top- and bottom-lines. During its latest earnings report, Target reported that its comparable store sales rose by 20.7% year-over-year with digital comparable sales up 155% during this period. During the first nine months of fiscal 2020, Target generated over $5.0 billion in free cash flow. The top end of our fair value estimate range sits at $182 per share, and as of this writing, shares of TGT are trading near $172, indicating Target appears fairly valued at this time. Shares of TGT yield a decent ~1.6% as of this writing, and we give Target a “GOOD” Dividend Safety rating given its impressive cash flow profile.

Nov 16, 2020

Value Is Not Static and the Qualitative Overlay Is Vital to Our Process
With prudence and care, the Valuentum Buying Index process and its components are carried out. Our analyst team spends most of its time thinking about the intrinsic value of companies within the context of a discounted cash-flow model and evaluating the risk profile of a company's revenue model. We have checks and balances, too. First, we use a fair value range in our valuation approach as we embrace the very important concept that value is a range and not a point estimate. A relative value overlay as the second pillar helps to add conviction in the discounted cash-flow process, while a technical and momentum overlay seeks to provide confirmation in all of the valuation work. There's a lot happening behind the scenes even before a VBI rating is published, but it will always be just one factor to consider. Within any process, of course, we value the human, qualitative overlay, which captures a wealth of experience and common sense. We strive to surface our best ideas for members.

Jul 24, 2020

Dividend Increases/Decreases for the Week Ending July 24
Let's take a look at companies that raised/lowered their dividend this week.