Valuentum Exclusive Analysis for the Discerning Investor

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Dec 1, 2023

A Note on Valuation -- Low P/E Stocks with High Dividend Yields
Image: Stocks with low valuation multiples have trailed the broader S&P 500 (orange) considerably since the depths of the Great Financial Crisis. Today, with all the readily available information and data out there, it is far more likely the case that a company with a low P/E ratio actually deserves it, and a firm with an outsized dividend yield just holds a lot of net debt on their books. Investing in low P/E stocks or stocks with low valuation multiples without considering their intrinsic values (i.e. fair value estimates) may result in owning a basket of value traps. Investors may be attracted to these types of stocks for their low P/E ratios and hefty dividend yields, but just having a low P/E ratio and a high dividend yield doesn’t a good stock make. If investing were this easy, so-called “value stocks” wouldn’t have underperformed the market significantly for more than a decade and a half now.

Nov 29, 2023

Latest Report Updates
Check out the latest report refreshes on the website.

Nov 27, 2023

How Do We Use the Valuentum Buying Index?
Image: We highlighted Exxon Mobil to start 2022, and the stock was one of the best performers in the S&P 500 last year. Exxon Mobil became a “Valuentum” stock last year, with shares being undervalued, exhibiting a strong technical breakout, and sporting an attractive dividend yield to boot. The stock became a huge winner. Note: Exxon is no longer included in the simulated newsletter portfolios. The image is an excerpt from an email sent to members January 5, 2022.We answer one of the most frequently asked questions about the Valuentum Buying Index.

Oct 30, 2023

The Dividend Growth Newsletter Portfolio’s Outperformance
Image: The Dividend Cushion ratio is one of the most powerful financial tools an income or dividend growth investor can use in conjunction with qualitative dividend analysis. The ratio is one-of-a-kind in that it is both free-cash-flow based and forward looking. Since its creation in 2012, the Dividend Cushion ratio has forewarned readers of approximately 50 dividend cuts. We estimate its efficacy at ~90%. Large cap growth names in the likes of Apple, Microsoft, Oracle, and Cisco form a solid foundation for continued dividend growth across the portfolio thanks in part to their fantastic Dividend Cushion ratios. Not only this, but we like the defensive characteristics of garbage hauler Republic Services and McDonald’s, and the tried-and-true dynamics of Home Depot, Honeywell and UnitedHealth, which can handle just about any economic environment that is thrown at them. Today, the 10-year Treasury rate stands at close to 5%, so while many dividend growth stocks don’t yield as much, we still like their cash-based sources of intrinsic value, as such dynamics offer substantial support to their equity prices, despite competing sources of income.

Oct 27, 2023

Dividend Increases/Decreases for the Week of October 27
Let's take a look at firms raising/lowering their dividends this week.

Sep 20, 2023

ICYMI: Questions for Valuentum’s Brian Nelson
Valuentum's President Brian Nelson, CFA, answers your questions.

Aug 17, 2023

3 High Dividend Yielders for Consideration
Image: Entities with large net cash positions and substantial free cash flow generation have outperformed not only the broader stock market, but also key high yield areas, including REITs, mortgage REITs and master limited partnerships during the past 10 years. Source: The respective ETF sponsors. The skills to successfully invest for long-term capital gains or long-term dividend growth are much different than those required for generating high yield dividend income. Income investing is a much different proposition. However, the skills do center on a similar equity evaluation process, but one that requires an acknowledgement and heightened awareness of considerably greater downside risks. Income investing, or high yield dividend income investing, should at times be considered among the riskiest forms of investing, as many high dividend-yielding securities tend to trade closer to the characteristics of junk-rated bonds than they do most net cash rich and free cash flow generating powerhouses that we like so much in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio.

Aug 9, 2023

Will Crude Oil Prices Hit $100 Again?
Image: US field production of crude oil is approaching record highs. Source: EIA. The next few weeks will likely see a rally in energy equities, but we note that U.S. field production of crude oil is approaching all-time highs and will likely eclipse all-time highs this year, given the pace of monthly year-over-year increases. With shale oil abundant and production still advancing nicely, the rise in crude oil prices this summer is largely of the speculative variety, in our view. We could see a run in black gold to the triple digits, but both supply and production remain healthy, and if crude oil prices reach the $100+ mark, we don’t see them staying there for long. We think investors are rotating out of this year’s big winners, a healthy consolidation, and we won’t be making any changes to the newsletter portfolios on account of what we believe is a temporary rotation into energy equities.

Aug 3, 2023

Albemarle Is One of the Best Growth Stories on the Market Today
Image: Albemarle is a low-cost producer of lithium derivatives, an end market that is expected to experience tremendous demand in the coming years. On August 2, Albemarle Corp. reported excellent second-quarter 2023 results that showed net sales advancing 60% and adjusted diluted earnings per share more than doubling in the quarter. For the full-year 2023, net sales are now expected to be between $10.4-$11.5 billion (was $9.8-$11.5 billion) thanks in part to continued strength in electric vehicle (EV) demand. Our fair value estimate for Albemarle stands at $257 per share, well above where shares are currently trading. We think the market is underestimating not only its growth potential but also mid-cycle levels of profitability.

Jun 5, 2023

ALERT: Going to “Fully Invested” in the Best Ideas Newsletter Portfolio
Image: Since the publishing of the first edition of the book Value Trap, the stylistic area of large cap growth (SCHG) has meaningfully outperformed both the equal-weight S&P 500 (SPY) and small cap value (IWN).With the debt-ceiling debate behind the markets, the regional banking crisis largely in the rear-view mirror, and the Fed winning the fight against inflation, a continuation of the strength in the markets as witnessed from the October 2022 lows can probably be expected. We're going to "fully invested" in the Best Ideas Newsletter portfolio today and expect to do the same in the Dividend Growth Newsletter portfolio and High Yield Dividend Newsletter portfolio soon.