Valuentum Exclusive Analysis for the Discerning Investor

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Jun 24, 2022

Best Idea Korn Ferry Enters New Fiscal Year on a High Note
Image Shown: Best idea Korn Ferry posted a stellar fourth quarter of fiscal 2022 earnings report with several of its core financial metrics reaching all-time highs. The firm also issued out favorable near term guidance in conjunction with its latest earnings update. We continue to be huge fans of the global management consulting firm. Image Source: Korn Ferry – Fourth Quarter of Fiscal 2022 IR Earnings Presentation. On June 22, global management consulting firm Korn Ferry reported fourth quarter earnings for fiscal 2022 (period ended April 30, 2022) that smashed past both consensus top- and bottom-line estimates. The firm also raised its dividend 15% sequentially to $0.15 per share or $0.60 on an annualized basis in conjunction with its earnings update, good for a forward-looking yield of ~1.1% as of this writing. Korn Ferry’s dividend growth story offers incremental upside to its substantial capital appreciation potential. We include Korn Ferry as an idea in the Best Ideas Newsletter portfolio and our fair value estimate sits at $86 per share, with the lower end of our fair value estimate sitting at $69 per share. As of this writing, shares of KFY are trading well below the low end of our fair value estimate range.

Jun 22, 2022

Dividend Growth Idea Oracle Showing Serious Growth Momentum
Image Source: Oracle Corporation – September 2019 IR Presentation. On June 13, Oracle Corp reported fourth quarter earnings for fiscal 2022 (period ended May 31, 2022) that beat both consensus top- and bottom-line estimates. The tech giant also provided favorable constant currency revenue growth guidance for its cloud businesses for fiscal 2023. Shares of ORCL initially surged higher in the wake of its latest earnings report before drifting modestly lower along the decline in broader equity markets. We include Oracle as an idea in the Dividend Growth Newsletter portfolio and shares of ORCL yield ~1.9% as of this writing.

Jun 20, 2022

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.

Jun 17, 2022

Qurate Retail Faces Difficult Turnaround Process
Image Source: Qurate Retail Inc – First Quarter of 2022 IR Earnings Presentation. Executive Summary: Qurate Retail Inc is home to several well-known retail brands including QVC and HSN that operate television networks and online marketplaces that sell curated products. The company is contending with several exogenous shocks such as inflationary pressures and supply chain hurdles, while customer engagement levels are on the decline after growing during the initial phases of the COVID-19 pandemic. Qurate Retail has a massive net debt load and sizable annual financing obligations, and its margins have deteriorated substantially of late. Due to its complex share structure and management organization, weak financial position, and lackluster outlook, we are not interested in Qurate Retail’s common or preferred shares at this time. Qurate Retail is too risky for our taste.

Jun 14, 2022

Prologis Buying Duke Realty as Logistical Real Estate Market Consolidates Further
Image Shown: Prologis Inc is merging with Duke Realty Corporation through an all-stock acquisition that will see Prologis cement itself as a logistical real estate powerhouse in the US and worldwide. Image Source: Duke Realty Corporation / Prologis Inc – June 2022 IR Presentation announcing the acquisition of Duke Realty by Prologis. On June 13, Prologis Inc announced it was buying Duke Realty Corporation through an all-stock transaction worth ~$26 billion when including the assumption of debt. In the wake of severe capital market volatility, some major deals in the real estate investment trust (‘REIT’) space are still getting done. Back in May 2022, Duke Realty rejected Prologis’ previous offer worth ~$24 billion as being “insufficient” which prompted Prologis to sweeten the pot to get a deal done.

Jun 14, 2022

Stocks Up 70%+ Since COVID-19 Pandemic Bottom, Best Ideas Outperforming So Far in 2022
Image Source: Mike Cohen. Investors should be looking for opportunities today, while others around them are panicking, especially those that leveraged into crypto many months ago near the peak. We continue to be huge fans of the areas of large cap growth and big cap tech as these areas not only are flush with entities that have strong cash-based sources of intrinsic value but also have been beaten down unfairly in recent months, in our view. It may be hard to believe, but we’re staying the course. We like stocks for the long haul, and we don’t expect anything like what happened during the COVID-19 meltdown or the Great Financial Crisis. This is but a "normal" bear market in our view, and we still believe stocks could make a huge rebound in the near term.

Jun 14, 2022

Best Idea Korn Ferry Supported by Stellar Financials
Image Shown: Korn Ferry put up tremendous performance in the quarter ended January 2022 and provided favorable near term guidance in conjunction with its fiscal third quarter earnings update. We include Korn Ferry in our Best Ideas Newsletter portfolio. Image Source: Korn Ferry – Third Quarter of Fiscal 2022 IR Earnings Presentation. The global organizational consulting firm Korn Ferry is included in the Best Ideas Newsletter portfolio and we continue to be huge fans of the name. Korn Ferry is a tremendous free cash flow generator with a stellar business model. The differentiated nature of its offerings provides Korn Ferry with ample pricing power, allowing it to preserve its margins in the face of major inflationary headwinds. Korn Ferry is supported by a nice net cash position and its underlying financial performance has been aggressively trending in the right direction.

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).

Jun 9, 2022

Albemarle Raises Guidance Twice in One Month!
Image Shown: An overview of Albemarle Corporation’s business profile. We include Albemarle as an idea in our ESG Newsletter portfolio. Image Source: Albemarle Corporation – May 2022 IR Presentation. When the specialty chemicals company Albemarle Corp published its first quarter 2022 earnings report May 4, the firm boosted its full-year guidance in a big way. That guidance boost was attributed to outperformance at its lithium operations and to a lesser extent, its bromine operations, which offset major inflationary headwinds facing its refining catalysts operations. In the wake of favorable contract negotiations covering sales of lithium derivatives and related products, Albemarle further boosted its full-year guidance in late May.

Jun 9, 2022

Best Idea Dollar General Beats Consensus Estimates and Raises Guidance in the Face of Substantial Headwinds
Image Shown: Dollar General Corporation’s GAAP net sales rose in the first quarter of fiscal 2022 on a year-over-year basis due to growth in its net store count. Image Source: Dollar General Corporation – May 2022 8-K SEC Filing. As a discount retailer, Dollar General is contending with myriad headwinds though its underlying business is holding up quite well. We continue to view its capital appreciation upside potential quite favorably, and its dividend program offers incremental upside potential. Shares of DG yield ~1.0% as of this writing.