Valuentum Exclusive Analysis for the Discerning Investor

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Oct 20, 2022

Announcing Valuentum’s Customer Appreciation Day Winners!
Let's see who won an autographed copy of Value Trap and what they said about Valuentum's research! We applaud all of our members in their quest to preserve and generate long-term wealth. Keep going strong!

Oct 19, 2022

New Payment Option! Valuentum Research Update!
We're excited to say that we're adding additional payment flexibility at Valuentum. Many members have expressed interest in paying via other providers, and we have added Square to the mix. You can use credit or debit card or bank (ACH) to pay via invoice. With all of the goings-on in the financial technology and payments space, we wanted to continue to provide members options to pay their memberships how they want and through who they want. You can always reach out to us at info@valuentum.com.

Oct 8, 2022

Microsoft Hinted at Trouble in Calendar Q2 But AMD’s Massive $1 Billion Quarterly Q3 Revenue Miss Spells Big Problems for PC Market; Search and News Advertising Revenue Also Likely Weakening Substantially
Image Source: Fritzchens Fritz. Economic conditions have deteriorated rapidly since Microsoft warned about deteriorating PC market demand in July of this year. AMD’s preliminary third-quarter report announced October 6 showed a massive $1 billion miss relative to prior expectations, and we think this is the beginning of a vicious cyclical downturn in the semiconductor industry, with few immune to the troubles, particularly in light of Apple’s warning about iPhone 14 demand. Further, we think search and news advertising has likely deteriorated since the calendar second-quarter reporting season, too, and this doesn’t bode well for the likes of Alphabet and Meta Platforms. Recent news about the strength of Tiktok and the lack of enthusiasm by Meta Platforms’ insiders that are building the metaverse have us thinking that Meta has turned into a value trap. We won’t hesitate to drop shares if the company’s outlook in its third-quarter report comes up short.

Sep 30, 2022

Nike’s Fundamental Backdrop Speaks of Serious Impending Global Recession
Image Source: Raul Gonzalez. Nike’s share price has been roughly cut in half this year, and its fundamental backdrop speaks of a serious impending global recession, in our view. Weak revenue performance, lower gross margins, bloated inventory, and significant troubles in China suggest even tougher times are ahead. Nike is a not included in any of the simulated newsletter portfolios, and we’d be cautious on it as well as the broader retailing industry as the U.S. enters what could be a deep recession in 2023. Things are going to get worse before they get better.

Sep 7, 2022

Post-Mortem on Facebook (Meta Platforms): Apple Crushed Our Thesis
Image: Thesis creep kept us excited about Meta, but we've since trimmed the "weighting" in the simulated Best Ideas Newsletter portfolio. We still like Meta near these technical support levels, but only as a smaller "weighting" in the simulated Best Ideas Newsletter portfolio, as updated August 19. What more can we say--Apple is eating Facebook’s lunch, and the iPhone giant is now advancing with its advertising revenue, too. Apple blew up our thesis on Meta, and that's the long and short of it.

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.

Aug 24, 2022

ICYMI (Aug 19) -- ALERT -- PYPL, META, GOOG, V -- Making Some Big Changes in the Simulated Best Ideas Newsletter Portfolio!
Image Shown: We are very happy with the overall "performance" of the simulated Best Ideas Newsletter portfolio, which is carving out 2.6 percentage points of relative outperformance so far in 2022 on a price-only basis, as shown in the table above. However, we're making some big changes to the simulated newsletter portfolio today on some of our favorite names. Our best ideas continue to be in the simulated Best Ideas Newsletter portfolio, the simulated Dividend Growth Newsletter portfolio, the simulated High Yield Dividend Newsletter portfolio, the simulated ESG Newsletter portfolio, and the Exclusive publication, as well as with our additional options commentary. We're making some big moves in the simulated Best Ideas Newsletter portfolio today! At the moment, the simulated Best Ideas Newsletter portfolio is carving out about 2.6 percentage points of relative outperformance so far in 2022, on a price-only basis relative to the the SPDR S&P 500 Trust ETF. Overall, after some huge years, the simulated Best Ideas Newsletter portfolio is down a modest ~8.6% in 2022, by our estimates. Pretty good, all things considered. That said, the SPDR S&P 500 Trust ETF has bounced right off its 200-day moving average (technical resistance), and we're not going to sit by while the risks to the market this year increase. We remain bullish on stocks for the long haul, of course, but we think incremental alpha may be generated by removing/trimming/adding to some of our winners in the simulated Best Ideas Newsletter portfolio at this time. We're changing our mind on a couple things, too, as any good investor does. [This note was emailed to members August 19.]

Aug 19, 2022

Nelson: The 16 Most Important Steps To Understand The Stock Market
Image Source: Tim Green. We outline the '16 Most Important Steps to Understand the Stock Market.' We think it's important to take a read of these key stock market tenets when things are going great -- and perhaps even more important when things aren't going your way. This continues to be a working document.

Jun 10, 2022

Taiwan Semi Firing on All Cylinders
Image Source: Taiwan Semiconductor Manufacturing Company – First Quarter of 2022 IR Earnings Presentation. We are huge fans of Taiwan Semi which offers investors a combination of capital appreciation and income growth upside. Shares of TSM yield ~2.1% as of this writing. Taiwan Semi is included as an idea in our ESG Newsletter portfoliio. The firm is incredibly shareholder friendly with good governance practices, focuses on sustainable manufacturing practices where feasible (placing a great emphasis on effective resource management, limiting pollution, and utilizing green energy), and has a management team that comes from diverse backgrounds (keeping in mind Taiwan Semi is headquartered in Hsinchu, Taiwan).

Apr 10, 2022

Cash-Based Sources of Intrinsic Value for Meta Platforms and PayPal Remain Strong
Image Shown: Shares of Meta Platforms Inc (blue line) and PayPal Holdings Inc (orange line) have staged a nice comeback during the past month, as of the start of April 2022. Rising interest rates and the impact that has had on the market's discount rate implicitly used within the enterprise cash flow pricing process has pressured the value of equities with long free-cash-flow growth tails--stocks that are expected to grow at a meaningful premium over global economic growth over the coming decades. The rapid increase in the 10-year Treasury rate, no doubt, has had a profound impact on the equity values of long-duration cash-flow companies such as those held in the ultra-speculative ARK Innovation ETF, for example. However, established big cap tech firms and many fintech entities shouldn't necessarily be as impacted by rising interest rates as those of many currently money-losing speculative innovation names that won't generate meaningful levels of free cash flow for 5 to 10 years, maybe longer. For example, shares of companies such as Apple Inc. or Microsoft Corp. should only have but a muted impact from rising rates; these companies have huge net cash positions and are already generating strong free cash flow. It can even be argued that higher inflation/rates will afford Apple and Microsoft pricing power to raise product and software prices. While we might expect the ARK Innovation ETF to be down nearly 40% year-to-date and more than half during the past 52 weeks, we don't think it makes a lot of sense for some of the strongest, large cap growth names to be off ~12%, on average, year-to-date. We think the market, in many instances and especially within the area of technology, is throwing the baby out with the bathwater. Shares of Meta Platforms Inc, formerly Facebook, and PayPal Holdings Inc are two such names that the market has been beating down too much, in our view. Though some weakness in Meta Platform's and PayPal's shares can be expected in the current market environment, year-to-date declines of 30%+ and 40%+, respectively, are a bit much. That said, during the past few months, we have reduced our fair value estimates for both Meta Platforms and PayPal for good reasons. For starters, Meta Platforms is investing heavily in the metaverse, a digital universe, and is scaling up its data center capacity to support its efforts on this front (which is driving its capital expenditure and operating cost expectations up sharply in the medium-term). Meta Platforms is not expected to make a meaningful amount or any money on these investments for some time. PayPal is facing headwinds from hefty customer acquisition costs to grow its active user base amid rising competitive threats. We also think that we may have been too aggressive within our valuation model when we built in too much earnings leverage during the next five years at PayPal. Said another way, the fintech company’s mid-cycle operating margin is not what we once though it was--as PayPal will find it difficult to meaningfully expand its margins in the current environment. However, putting it all together, these pressures and others have all been reflected in our current fair value estimates (and fair value estimate ranges) for Meta Platforms, which sits at $367 per share, and PayPal, which sits at $152 per share. Both companies are included as ideas in the Best Ideas Newsletter portfolio, and we are beginning to see signs of a rebound underway. For long-term investors, we think Meta Platforms is a no-brainer at current prices, though we may be a bit more cautious on PayPal, which is now more of a "show-me" story, given recent hiccups. All this having been said, let's dig in to why we still like Meta Platforms and PayPal.