Valuentum Exclusive Analysis for the Discerning Investor

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Dec 29, 2023

Kinder Morgan’s ~6.4% Dividend Yield Is Much Stronger These Days
Image: Kinder Morgan is back on track. Image Source: Kinder Morgan. Early in December, Kinder Morgan released financial expectations for 2024 that showed the midstream energy giant is back on track. Excluding its recent purchase of NextEra Energy Partners’ STX Midstream assets, Kinder Morgan expects 5% expansion in adjusted EBITDA and distributable cash flow [DCF] in 2024 thanks to growth in its Natural Gas Pipelines and Energy Transition Ventures segments coupled with rate escalations across its operations. For 2024, management is targeting its 7th consecutive year of dividend increases with a projected annualized dividend of $1.15 in 2024. Net debt-to-Adjusted EBITDA is targeted at 3.8x at the end of 2024, a level that is materially lower than its long-term target of 4.5x. We're liking the continued improvements at Kinder Morgan in recent years.

Dec 29, 2023

Dividend Increases/Decreases for the Week of December 29
Let's take a look at firms raising/lowering their dividends this week.

Dec 28, 2023

6%+ Dividend Yielder Cracker Barrel Needs to Raise Menu Prices More Aggressively
Image: Cracker Barrel remains focused on returning cash to shareholders. We think performance at Cracker Barrel is fixable, but it has to be menu price-driven as commodity price and hourly wage inflation continues to eat into operating income, and traffic remains troubled even with increased spend on marketing. Notwithstanding its long-term unit growth opportunities at its Cracker Barrel and Maple Street stores, Cracker Barrel’s unique concepts continue to resonate with consumers, but the firm is being left behind in a world where other restaurants are sacrificing price-conscious consumers for those less concerned about price increases. Its ~6.3% dividend yield at the time of this writing speaks of heightened risk, as does its 0.5 Dividend Cushion ratio, but if Cracker Barrel can turn things around by ratcheting up its pricing initiatives more aggressively in fiscal 2025 and beyond, the stock could end up being one of the most attractive income ideas on the market today. For now, however, we’re watching and waiting for a strategic shift.

Dec 27, 2023

Dividend Aristocrat Enterprise Products Partners Boasts 7%+ Yield, Investment-Grade Marks
Image: Enterprise Products Partners continues to raise its distribution year after year. Source: Enterprise Products Partners. Though, in general, we’re not too excited by the midstream pipeline space given their capital-intensive nature and hefty net debt positions, Enterprise Products Partners has a lot of things going for it. The company boasts investment-grade credit ratings (A-/A-/A3), has strong and consistent returns on invested capital, and has put up 25 years of consecutive distribution increases. In addition to growing its payout in each year for more than two decades, management has done a great job reducing its leverage ratio (net debt adjusted for equity credit in its junior subordinated notes divided by adjusted EBITDA). For the trailing twelve months ended in the third quarter, its leverage ratio has fallen to 3.0x from 4.1x in 2017. All told, we think Enterprise Products Partners’ growth initiatives will help to solve revenue pressures, and we expect the company to continue to drive distribution growth in the coming years as it keeps its leverage in check.

Dec 26, 2023

5 Questions Advisors Should Ask When Interviewing Fund Managers
Image Source: Investment Zen. These are not your typical questions. These are the questions advisors should ask to find the most analytical fund managers. The questions don’t cover strategy or market outlook, but instead hit upon the analytical foundation of the fund manager, which could be more important than anything else.

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.

Dec 14, 2023

Brief Note: Just How Good Has Our Stock Selection Been?
Has anyone really done better than this? We hope you have benefited greatly!

Dec 11, 2023

Oracle’s “Business Is Good and Getting Better”
Image Source: Peter Kaminski. On December 11, Oracle reported mixed second-quarter results for its fiscal 2024 that showed total revenue advancing 5% on a year-over-year basis (4% in constant currency), slightly lower than expectations, and non-GAAP earnings per share of $1.34 that came in slightly ahead of what the market was looking for. The company’s non-GAAP operating margin of 43% in the quarter helped to drive non-GAAP net income 14% higher than the same period a year ago (11% in constant currency). We’re not letting the slight miss on the top line sway us from our constructive stance on shares. Our fair value estimate stands at $108 per share, about in-line with where shares are currently trading.

Dec 10, 2023

First Gene-Editing Therapy Coming to Market; Reiterating Our Positive Stance on Vertex Pharma
Credit: Darryl Leja, NHGRI. On December 8, 2023, the U.S. Food and Drug Administration announced that it had approved Vertex Pharma’s and CRISPR Therapeutics’ novel gene-editing therapy (“Casgevy” – exa-cel) for sickle cell disease [SCD] in patients that are 12 years of age or older. This is the first such approval of its kind in U.S. history and will likely open the door for more gene-editing therapies for other rare diseases in the future. Estimates indicate that roughly 16,000 people will be eligible for the treatment at an estimated cost of around $2.2 million each, according to Reuters. The one-time market size of roughly $35.2 billion is a needle-mover, but the pace and timing of adoption of the therapy among the eligible population is difficult to estimate at this time. Note also that the therapy is of one-time application, meaning the therapy is a functional cure and will not be a source of recurring revenue from each patient. Nevertheless, it is an exciting development for medical science.

Dec 8, 2023

Reinstating Coverage of Lululemon
Image Source: Mike Mozart. On December 7, Lululemon reported strong third-quarter results for its fiscal 2023, with revenue increasing 19% and comparable sales increasing 14% on a constant-dollar basis. Adjusted earnings per share of $2.53 came in roughly 10% higher than the consensus forecast. We are reinstating coverage of Lululemon with a $470 per share fair value estimate and an Attractive Economic Castle rating. We like Lululemon but we won’t be adding it to any newsletter portfolio at this time.