Valuentum Exclusive Analysis for the Discerning Investor

Symbol Keyword

Feb 22, 2020

Is a Stock Market Crash Coming? -- Coronavirus Update and P/E Ratios
Image Source: World Health Organization, Coronavirus disease 2019 (COVID-19), Situation Report -- 32. We don’t think this is the environment to put new capital to work, and we remain highly cautious of what COVID-19 means for global economic growth not just in the first quarter of 2020 but for the rest of this year (maybe longer). Right now, the US markets are not really factoring in anything related to COVID-19, and perhaps may be adjusting to China’s stimulus in artificially propping up the markets as if the outbreak is somehow a “positive thing.” With the S&P 500 trading at 19.0 forward earnings estimates--estimates that are likely too high given the evidence we are seeing with respect to a slowdown due to COVID-19--and corporate debt levels more elevated than ever before (note, a high net debt level should depress the P/E in enterprise valuation--US corporate debt has advanced 50% over the past decade, to $10 trillion), it is our contention that the current market reflects a “situation-equivalent” forward P/E (i.e. rightsizing for new net debt relative to the dot-com peak and adjusting for lower forward earnings expectations compared with current forecasts) perhaps greater than 24.4, which was recorded at the peak of the dot-com bubble. Though interest rates are lower than they were at the time of the dot-com crash, suggesting a modest reasonable bump to normalized forward P/E ratios of ~15 times to reflect “fair valuations,” we could seriously be in for fundamental-driven crash soon, as both the earnings multiple and earnings estimates contract aggressively. Hypothetically, a contraction to a 16x forward multiple on earnings estimates just 10% lower than currently forecast implies an S&P 500 of 2,566, or a swoon of about 20%-30% from current levels--and that would just get us down to 16x still-respectable forward numbers. How quantitative-driven price-agnostic trading may impact this scenario is not known either, and all of this could be setting up for a wild ride in the coming weeks and months. Fasten your seatbelts. We’ll have a few newsletter portfolio alerts coming Monday.

Jan 23, 2020

Resetting Your Mental Model
Image Source: affen ajlfe. Having the right mental model and using the right information can be the reason why you win or lose in investing.

Aug 22, 2019

What’s on the Valuentum Team’s Mind?
Let’s get the Valuentum team’s thoughts on recent developments.

Aug 21, 2019

Home Depot, Lowe’s Largely Unfazed By Lumber Price Deflation
Image Source: Mike Mozart. The home improvement retailing market appears very, very healthy, and while consumers could have already taken advantage of ultra-low rates to do home repairs, additional Fed cuts certainly won’t hurt the backdrop for home improvement retailers. Home Depot and Lowe’s continue to put up solid results.

Apr 3, 2019

Risks Remain Prevalent For Mortgage REITs
Image shown: Mortgage REITs have held up better than master limited partnerships (MLPs) since mid-2015, but they haven't exactly done well. For income investors, they may be the lesser of the two pain areas, but we're still not really excited about them.The mortgage REIT space remains inherently risky as it is sensitive to difficult to predict mortgage markets, and many in the group employ significant leverage to augment net interest margins. We prefer more diversified plays on income, and while we dig deep into mREITs in this piece, we think caution is still very much in order.

Feb 27, 2019

News Roundup: Tesla’s Musk, Department Stores, Summit Midstream, Cracker Barrel, Home Depot, GE and More
No changes to simulated newsletter portfolios.

Dec 31, 2018

Valuentum Stock Screeners
Brian Nelson provides members with an update on Valuentum's stock screeners and the significant number of forward-looking data we provide. This article was sent to members via email December 29.

Dec 20, 2018

Market Mayhem -- Alerts for Members
Dear members -- we released a number of emails today. Please read and let us know if you have any questions. We're here for you.

Nov 19, 2018

In The News: Oil, Housing, and Cryptocurrency
Let’s take a look at some market-impacting headlines from the morning of November 19, including volatile oil prices, pressure in the housing market, and the sustained decline in Bitcoin.

Oct 25, 2018

Valuentum's ETF Reports
Image Source: Got Credit. Within each ETF report, we provide in-depth analysis and offer insights to help investors stay on top of key trends impacting exchange traded funds and their underlying industries, companies, and commodities. From evaluating the real estate cycle in REIT-focused ETFs to assessing the business dynamics of top holdings within consumer discretionary ETFs, for example, we focus on relevance and leave nothing important to the investment decision-making process out. Our ETF reports and ratings are completely forward-looking and bring the data to life with easy-to-understand analytics.