Valuentum Exclusive Analysis for the Discerning Investor

Symbol Keyword

Aug 15, 2012

Staples Stumbles
Office supply giant Staples reported weak second quarter results, and we're worried about the firm's business model going forward.

Jul 5, 2012

June Same Store Sales Actually Weren’t Bad
Though a few companies fell short of expectations, we thought June same-store sales numbers were mostly positive. We think lower energy prices may have reinvigorated the US consumer during the month.

Jun 28, 2012

Family Dollar’s Results Fall a Touch Short
Family Dollar's third-quarter wasn't awful, but we think shares are fairly valued.

Jun 19, 2012

After Collecting Millions, JC Penney President Michael Francis Resigns
Former Target Chief Marketing Officer Michael Francis resigned from his position as President at JC Penney on Monday. Francis had only been with the company since September 2011.

Apr 6, 2012

March Retail Sales Speak to Strength in the US Economy
Retail sales numbers issued by the ICSC reinforce our view that the US economy continues to grow and that the pace of expansion may even be accelerating.

Feb 23, 2012

Target Rounds Out 2011 with the Strongest Annual Comp Growth Since 2007
Target rounded out one of its best years in the last four. The retailer continues to reap the benefits of its remodeling efforts and REDcard loyalty program. Though we think management's long-term targets are aggressive, we expect valuation upside to the high $50s.

Nov 17, 2011

Target Posts Excellent Third-Quarter Results; Highest Quarterly Comp Growth Since Mid-2007
Target posted excellent third-quarter results that showed solid comparable-store sales increases and improved performance at its credit card operations.

Aug 18, 2011

Target Issues Strong Second Quarter, Posts Best Comps in Four Years
Target sems to be doing a great job navigating the perils of the domestic economic environment.

Consumer Staples Struggling with Higher Inflationary Costs, Group Hits 52-Week Lows
Image: The Vanguard Consumer Staples ETF (VDC) has notched a new 52-week low, and investors should note that we don’t think consumer staples entities are immune to an environment of higher inflation, where their price increases may not be fully absorbed by the consumer. Due to the commoditization of many of the goods produced in the consumer staples space, we think the consumer may instead trade down to off-brands or white label (“store brand”) products than pay up for branded merchandise. From where we stand, bellwethers in the consumer staples sector can’t price successfully ahead of inflationary headwinds, and many are experiencing tremendous gross margin pressure. Not only this, but in many cases, we think branded staples are experiencing demand (volume) destruction as consumers balk at price increases that still fall short of offsetting the heightened cost environment. Many consumer staples equities have huge net debt positions and hefty dividend obligations, and while many of the types of products they produce consumers cannot do without, we think we might see the consumer staples group’s share prices come under continued pressure in this market environment and eventually fetch what we think would be a market multiple (roughly three turns of earnings lower, or ~19x earnings to ~16x earnings). Even if this may not happen, however, there still appears to be some tough sledding ahead on a fundamental basis given report commentary, and we’ll look to evaluate our newsletter portfolios and their exposure to the consumer staples arena in the coming weeks to months. What remains clear is that the outlook for many consumer staples entities is not pretty.