Valuentum Exclusive Analysis for the Discerning Investor

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Jul 19, 2022

Dick’s Sporting Goods Facing Revenue “Normalization,” Long-Term Story In Tact
Image Source: Dick’s Sporting Goods Inc – First Quarter of Fiscal 2022 Infographic. Inflationary pressures, labor shortages, and supply chain hurdles are all weighing negatively on Dick’s Sporting Goods’ near term outlook. The retailer’s net cash position and strong cash flow generating abilities should help see it through this period of revenue “normalization,” and its longer term growth runway remains robust (underpinned by new store concepts, the potential for meaningful unit store count growth, ongoing customer loyalty and digital initiatives, and various in-store product layout optimization efforts). We continue to like Dick’s Sporting Goods as an idea in the Dividend Growth Newsletter portfolio. Shares of DKS yield ~2.2% as of this writing, and we see ample room for the retailer to push through substantial dividend increases over the long haul.

Jun 28, 2022

Nike’s Gross Margin Falls, Inventory Leaps in Fourth Quarter Fiscal 2022
Image Source: Valuentum. Nike CEO John Donahoe may have said it best in its fourth-quarter fiscal 2022 press release: “Nike’s results this fiscal year are a testament to the unmatched strength of our brands and our deep connection with consumers. Our competitive advantages, including our pipeline of innovative product and expanding digital leadership, prove that our strategy is working as we create value through our relentless drive to serve the future of sport.” What more can we say about this great company. We like its financials quite a bit, fourth-quarter fiscal 2022 earnings came in better than expected, the company is navigating supply chain issues, inflationary pressures, and weakness in Greater China quite well, and it just launched a new massive buyback program to take advantage of its underpriced stock. Nike boasts an impressive Dividend Cushion ratio of 3.8, and we’re reiterating our $139 per share fair value estimate on shares. Shares yield ~1.1% at the time of this writing.

Apr 6, 2022

Lululemon Firing on All Cylinders; Shares Recovering
Image Shown: Shares of Lululemon Athletica Inc are recovering in the wake of the company’s recent earnings report. On March 29, Lululemon Athletica Inc reported fourth quarter earnings for fiscal 2021 (period ended January 30, 2022) that matched consensus top-line estimates and beat consensus bottom-line estimates. Lululemon also announced it had initiated a new $1.0 billion stock buyback program after completing its previous program in the first quarter of fiscal 2022. The company issued favorable guidance for fiscal 2022 during its latest earnings update, which helped drive shares of LULU sharply higher during normal trading hours on March 30. Shares of LULU are up more than 20% during the past 52 weeks through the time of this writing, more than doubling the return of the S&P 500 during that time. We value shares north of $400 each at the time of this writing, revealing significant potential upside should price-to-fair value estimate convergence materialize.

Mar 29, 2022

Nike Holding Its Own Against Major Exogenous Shocks
Image Shown: Shares of Nike Inc are on an upward climb again after dropping significantly from November 2021 to March 2022. Nike is holding its own in the face of major exogenous headwinds. The firm’s pivot towards D2C and digital sales are having a powerful impact on its business and underlying financial performance. We appreciate that Nike is a stellar generator of shareholder value, though we caution that inflationary headwinds and supply chain hurdles loom large over its near term outlook, as does the Ukraine-Russia crisis due to rising fuel expenses and the risk that portions of the global economy (particularly developing and emerging markets) may enter a recession. We continue to be bullish on U.S. equities and the domestic economy.

Jan 22, 2022

Don’t Throw the Baby Out with the Bathwater
Image: Erica Nicol. Junk tech should continue to collapse, but the stylistic area of large cap growth and big cap tech should remain resilient. Moderately elevated levels of inflation coupled with interest rates hovering at all-time lows isn’t a terrible combination. In fact, it’s not bad at all. The markets are digesting the huge gains of the past few years so far in 2022, and the excesses in ARKK funds, crypto, SPACs, and meme stocks are being rid from the system. Our best ideas are “outperforming” the very benchmarks that are outperforming everyone else. The BIN portfolio is down 6.4% and the DGN portfolio is down 3.2% year to date. The SPY is down 7.8%, while the average investor may be doing much worse. Our timing to exit some very speculative ideas in the Exclusive publication has been impeccable. Beware of “best-fitted” backtest data regarding sequence of return risks. Research is to help you navigate the future, not the past. We remain bullish on stocks for the long haul and grow more and more excited as our simulated newsletter portfolios continue to hold up very well. Don’t throw the baby out with the bath water. Stick with the largest, strongest growth names. We still like large cap growth and big cap tech, though we are tactical overweight in the largest energy stocks (e.g. XOM, CVX, XLE). The latest short idea in the Exclusive publication has collapsed aggressively since highlight January 9, and we remain encouraged by the resilience of ideas in the High Yield Dividend Newsletter portfolio and ESG Newsletter portfolio. Our options idea generation remains ongoing.

Dec 27, 2021

Nike Beats Estimates in the Face of Supply Chain Constraints
Image Shown: Shares of Nike Inc shifted higher in the wake of its latest earnings report. On December 20, Nike reported second quarter earnings for fiscal 2022 (period ended November 30, 2021) that beat both consensus top- and bottom-line estimates. The company did its best to navigate supply chain hurdles as efforts by public health officials and governments to contain the spread of the coronavirus (‘COVID-19’) pandemic in Southeast Asia (a major production hub for apparel and footwear) weighed quite negatively on its ability to meet demand.

Dec 26, 2021

VIDEO/TRANSCRIPT: 2021 Valuentum Exclusive Call: Inflation Is Good
Valuentum's President Brian Michael Nelson, CFA, explains why investors should not fear inflation, why government agencies such as the Fed and Treasury are prioritizing something other than price discovery, why the 10-year Treasury rate is a must-watch metric, and why Valuentum prefers the moaty constituents in large cap growth due to their net cash rich balance sheets, tremendous free cash flow generating potential, and secular growth tailwinds.

Dec 2, 2021

Dividend Growth Idea Dick’s Sporting Goods Is Firing on All-Cylinders; Raises Guidance (Again) While Generating Gobs of Free Cash Flow
Image Source: Valuentum. On November 23, Dick’s Sporting Goods reported third quarter earnings for fiscal 2021 (period ended October 30, 2021) that beat both consensus top- and bottom-line estimates. The sporting goods retailer once again raised its full-year guidance for fiscal 2021 in conjunction with its latest earnings report. Dick’s Sporting Goods also raised its guidance when reporting its fiscal second quarter earnings back in August 2021 and its fiscal first quarter earnings back in May 2021, highlighting management’s growing confidence in the company’s near term performance. Though shares of DKS sold off following its latest earnings update, likely due to concerns over inflationary pressures and supply chain hurdles, Dick’s Sporting Goods’ outlook remains rock-solid. We continue to like the firm as an idea in the Dividend Growth Newsletter portfolio.

Nov 12, 2021

Hard Work and the Trust That Binds
Image: Terry Johnson. It’s easy to forget how much we’ve been through the past two years. Often, we forget how helpful the warning that markets were going to crash was the weekend before they did on February 22, 2020, “Is a Stock Market Crash Coming? – Coronavirus Update and P/E Ratios,” how we thought dollar-cost-averaging made sense at the bottom in March 2020, and how we went “all-in” in April 29, 2020, “ALERT: Going to “Fully Invested” – The Fed and Treasury Have Your Back,” when we saw the writing was on the wall for this blow off top. If nothing else, these three moves alone during the past couple years have paid for a lifetime of subscriptions.

Aug 27, 2021

Dividend Growth Idea Dick’s Sporting Goods Announces Great News
Image Shown: Dividend Growth Idea Dick’s Sporting Goods Inc has put up tremendous performance of late. On August 25, Dick’s Sporting Goods reported second-quarter earnings for fiscal 2021 (period ended July 31, 2021) that soared past consensus top- and bottom-line estimates. Furthermore, Dick’s Sporting Goods raised its full-year guidance for fiscal 2021, doubled its minimum share buyback program to $0.4 billion for fiscal 2021, increased its regular quarterly dividend by 21% on a sequential basis to $0.4375 per share (bringing its annualized payout up to $1.75 per share), and announced a special dividend of $5.50 per share during its latest earnings update. We are incredibly pleased with the company’s performance of late. Dick’s Sporting Goods is included as an idea in the Dividend Growth Newsletter portfolio.