Valuentum Exclusive Analysis for the Discerning Investor

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Sep 8, 2022

LINK --> Massive Unrest In Europe, Energy Crisis Could Be the Catalyst to Topple the Global Markets
Europe is on the brink Over 70000 people came out in support of Russia in Prague and are forcing the Govt to resign for supporting Ukraine pic.twitter.com/lwMAjkBM2U — Mahesh 🇮🇳 (@Mahesh10816) September 3, 2022 The European energy crisis continues to unfold, and we’ve been keeping our members updated on this huge story. In the wake of the Russian invasion of Ukraine in February 2022, the European Union (‘EU’) along with key Western allies (such as the US, UK, Canada, Japan, South Korea, and Australia) imposed punishing economic sanctions on Russia to hinder its efforts in Ukraine and deter other nations from pursuing imperialistic land grabs. Russia retaliated by limiting the flow of various energy products to nations that imposed those sanctions. In particularly, energy flows from Russia to member nations within the EU were curtailed aggressively, with an eye towards France, Italy, and Germany along with Poland and the Baltic states (Latvia, Lithuania, and Estonia). Natural gas, crude oil, and petroleum product exports from Russia to EU member nations have tanked this year. The land war in Ukraine has not grown into a massive economic war in Europe, and this catalyst could be the one that topples the global markets.

Aug 31, 2022

Valuentum: Outlook for Europe, China Is Bleak
Video: Valuentum's Associate Director of Research and Co-Portfolio Manager of the simulated newsletter portfolios, Callum Turcan, shares his thoughts about the global economy. Europe is facing considerable pressure from energy prices, while China may face a mortgage meltdown. Join Valuentum for this brief 6 minute video to get up to speed on the goings-on of the global economy and what troubles may be lurking ahead.

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.

Jun 28, 2022

High Yield: Diversified Refiner Phillips 66 A Good Replacement for Broad Consumer Staples Exposure
Image Source: Phillips 66 Investor Update May 2022. Phillips 66 is a top-notch operator in the downstream space with impressive refining and petrochemical assets supported by various midstream operations. Its investment-grade credit rating (A3/BBB+), with stable outlooks, better enables Phillips 66 to tap capital markets at attractive rates, something that we especially like when considering new ideas in the high yield dividend space. A growing global middle class and a growing global population supports Phillip 66's longer term outlook for refined product demand. We like the company as a high yield dividend consideration.

Jun 18, 2022

The Stock Market Is Nearing Technical Support Levels
Image: This year has been a difficult one for equity investors, but the selling pressure that has been common in the markets may start to slow as broader indices such as the S&P 500 begin to approach technical support levels. On the S&P 500, we think there is substantial technical support in the 3,200-3,500 range, which to us suggests that further near-term downside may be limited. The S&P 500 closed at 3,674.84 on Friday, June 17, and we think fair value is much higher. What might be a fair value for the S&P 500 today? Well, throwing the 10-year S&P 500 average multiple of 16.9x on 2023 expected earnings numbers of 251.76 gets to a 4,255 mark on the S&P 500, which is above the last closing level of 3,674.84 for the index. Benchmark Treasury rates remain low relative to history, and balance sheets of many S&P 500 companies are overflowing with net cash, supporting such a multiple, too. All told, investors might expect the stock market to hit technical support levels on the S&P 500 of 3,200-3,500 in the near term, but from where we stand, stocks remain an attractive proposition at the moment and a very attractive consideration over the long haul.

Mar 14, 2022

Valuentum Weekly: Yields on New Series I Savings Bonds Have Soared!
The Dow Jones, S&P 500 and NASDAQ futures are all indicated up Sunday night (March 13), but that may not mean much when trading kicks off tomorrow. The start to 2022 has been one of the worst stretches during the past decade, but broader market indexes still aren't down much, even after factoring in several expected rate hikes by the Fed and economic sanctions on Russia due to the war in Ukraine. According to data from Seeking Alpha, the S&P 500 (SPY), Dow Jones Industrial Average (DIA), and Nasdaq (QQQ) are off ~12%, ~10%, and ~19% so far this year, respectively. However, this weakness compares to (and is inclusive of) incredible 5-year price-only returns on the SPY, DIA, and QQQ of ~77%, ~58%, ~146%, respectively, so it's hard for stock investors to be disappointed in much of anything, even if all they were able to do was match the returns of the S&P 500 the past 5 years. Many, however, unfortunately, diluted those 5-year returns with hefty bond and international exposure and sometimes large AUM fees, so the weakness in 2022 is probably more painful for some than perhaps it should be. In any case, we remain bullish on stocks for the long run, with a heavy bent toward large cap growth and big cap tech with tactical overweight "positions" in big cap energy.

Mar 7, 2022

Valuentum Weekly: Outsized Energy Exposure Continues to Buoy Newsletter Portfolios
Image: Light crude oil futures once traded for roughly -$40 (negative $40) during the COVID-19 crisis, but have now rocketed to more than $120 in recent trading. Image Source: TradingView. The S&P 500, as measured by the SPY, is down 9% year-to-date, a modest pullback, in our view, particularly in light of the fantastic performance the past few years. Though not necessarily welcome, a down year every now and then for the broader market indexes and a modest bear market can only be expected, at times. The Dow Jones Industrial Average, as measured by the DIA, is down more than 7% year-to-date (not too bad), while the Nasdaq--as measured by the QQQ--and 'disruptive innovation' stocks--as measured by the Ark Innovation ETF--have fallen more than 15% and 36%, respectively, so far this year (data from Seeking Alpha). We like how the simulated newsletter portfolios are positioned. Energy resource prices continue to surge (with WTI crude oil prices skyrocketing north of $120 per barrel at last check), and they are bringing energy equities higher along with them. The simulated Best Ideas Newsletter portfolio, simulated Dividend Growth Newsletter portfolio, and simulated High Yield Dividend Newsletter portfolio are all materially overweight energy equities relative to the energy sector’s weighting in the S&P 500, and we expect to maintain such high tactical "exposure." Both the Energy Select Sector SPDR ETF and the Vanguard Energy ETF soared to 13-year highs last week. Our favorite energy ideas are the largest two energy majors, Exxon Mobil and Chevron, and both have hefty 'weightings' in each of the three aforementioned simulated newsletter portfolios. Russian equities, as measured by the RSX, are down nearly 80% so far this year, and we're pleased to say that we've largely avoided the fall out. We continue to like the broader areas of U.S.-heavy, large cap growth and big cap tech when it comes to long-term secular exposure, and we continue to like energy as a tactical overweight for the foreseeable future across the simulated newsletter portfolios, as much as we did even prior to the huge advance in energy resource prices and the invasion of Ukraine by Russia.

Mar 2, 2022

Evaluating the Exposure of Chevron and Exxon Mobil to Russia’s Energy Industry
Image Shown: Shares of Chevron Corporation (blue line) and Exxon Mobil Corporation (orange line) have skyrocketed over the past six months. Chevron Corp and Exxon Mobil Corp, our two favorite large cap energy firms included as ideas in the newsletter portfolios, have relatively modest exposure to Russia. Peers such as BP plc and Shell plc have publicly stated that they would effectively abandon their stakes in Russian operations, and there is a decent chance Chevron and Exxon Mobil will follow suit. Let's talk about the potential impact.

Jan 11, 2022

Valuentum’s Theses on Best Ideas Chevron and Exxon Mobil Playing Out
Image Shown: Shares of Chevron Corporation (the green/red bars) and Exxon Mobil Corporation (the blue/yellow bars) have been on a nice upward climb over the past six months with room to run higher as investors are rotating into energy firms in a big way. Raw energy resources pricing has surged higher during the past year with room to run. The global energy complex is on the rebound as demand for crude oil and refined petroleum products is steadily recovering from the worst of the coronavirus (‘COVID-19’) pandemic. As demand for electricity and heating needs held up well during the pandemic, liquified natural gas prices (‘LNG’) put up a strong year in 2021 and remain elevated. The OPEC+ cartel is committed to slowly phasing out its crude oil supply curtailment agreement first enacted in 2020, effectively limiting growth in global oil supplies at a time when demand is rebounding at a brisk pace. We view the near-term outlook for the global energy complex quite favorably and have been pounding the table on this issue for some time. Back on June 27, 2021, we added Chevron Corp and Exxon Mobil Corp as ideas to both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios and highlighted these portfolio changes. Shares of CVX and XOM yield a juicy ~4.3% and ~5.1% as of this writing, respectively. Recently, shares of both CVX and XOM have started shifting higher, and in our view, this is just the beginning of a strong cyclical recovery. We also recently added Chevron and Exxon Mobil as ideas to the High Yield Dividend Newsletter portfolio, and highlighted two of our favorite midstream master limited partnerships (‘MLPs’) in that publication as well. Our fair value estimate for Chevron sits at $140 per share and the high end of our fair value estimate range sits at $175 per share, while CVX is trading at ~$127 as of this writing. Our fair value estimate for Exxon Mobil sits at $92 per share and the high end of our fair value estimate range sits at $122 per share, while XOM is trading at ~$71 per share as of this writing. As investors continue to rotate into energy firms, we expect that the stock prices of Chevron and Exxon Mobil will continue converging towards our estimate of their respective intrinsic values.

Jan 10, 2022

High Yielding Philips 66 Has a Solid Plan in Place to Reward Its Shareholders
Image Shown: An overview of Phillip 66’s expansive asset base. Image Source: Phillips 66 – November 2021 IR Presentation. Demand for diesel and gasoline has largely recovered from the worst of the coronavirus (‘COVID-19’) pandemic, though kerosene demand (jet fuel) has a way to go given depressed levels of international travel. The refining giant Phillips 66 took advantage of the rebound seen over the past year to pare down its debt levels on a consolidated basis. At the end of December 2020, Phillips 66 had $13.4 billion in net debt (inclusive of short-term debt) on a consolidated basis, which fell down to $12.0 billion in net debt (inclusive of short-term debt) at the end of September 2021. Going forward, Phillips 66 now wants to focus on returning cash to shareholders as communicated during a January 2022 investor conference. Shares of PSX yield a nice ~4.6% as of this writing.