Valuentum Exclusive Analysis for the Discerning Investor

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Feb 18, 2020

Digital Realty Starts 2020 Off Right
Image Source: Digital Realty Trust Inc – Fourth Quarter and Full-Year 2019 IR Earnings Presentation. On February 13, the data center real estate investment trust (‘REIT’) Digital Realty Trust reported fourth quarter and full-year earnings for 2019 after the market close. The firm’s top-line marginally missed consensus estimates as its funds from operations (‘FFO’) per share modestly beat consensus estimates. Shares of DLR marched up 4% on February 14 as investors priced in the FFO per share beat and recent events. We continue to like shares of DLR as a holding in our Dividend Growth Newsletter portfolio. As of this writing, Digital Realty yields ~3.3%.

Feb 11, 2020

PayPal Closes Out a Stellar 2019 and the Future Looks Bright
Image Shown: PayPal Holdings Inc has been a big winner in our Best Ideas Newsletter portfolio, and we expect that to continue being the case going forward. PayPal Holdings is one of our favorite companies out there in the payment processing/financial tech space, up there with top weighted Best Ideas Newsletter portfolio holding Visa, and back on January 13 we increased our weighting in shares of PYPL in the Best Ideas Newsletter portfolio. We like PayPal’s rock-solid balance sheet, quality cash flow profile, and most importantly, its growth outlook.

Feb 10, 2020

Disney Reports Earnings and Provides an Update on the Novel Coronavirus Epidemic
Image Shown: Walt Disney Company recently reported earnings and provided an update as to what investors should expect going forward given the ongoing novel coronavirus epidemic in China. On February 4, Walt Disney reported earnings for the first quarter of its fiscal 2020 (period ended December 28, 2019). While Disney beat both consensus top- and bottom-line estimates, shares sold off modestly the next trading day over fears concerning the ongoing novel coronavirus epidemic (abbreviated as ‘2019-nCoV’) in China, and how that would impact its financial performance going forward. On January 13, 2020, we added shares of DIS to our Best Ideas Newsletter portfolio with a modest weighting given that shares were trading close to our fair value estimate at the time. However, we view Disney’s free cash flow growth outlook as very promising, which could see shares of DIS approach the high end of our fair value estimate range which sits at $168 per share. Additionally, we like its dividend coverage as its Dividend Cushion ratio sits at 3.1x, which supports a nice dividend growth trajectory as well. Shares of DIS yield ~1.2% as of this writing.

Feb 7, 2020

Update on Wuhan 2019 Novel Coronavirus Outbreak: 31,000+ Infections, 630+ Deaths
Image Source: 2019-nCoV, Centers for Disease Control and Prevention. The number of infections and deaths related to the Wuhan 2019 Novel Coronavirus has surged since our last update, but we maintain our view that investors should keep a level head. We continue to wait to add protection to the newsletter portfolios as the market absorbs a massive liquidity injection from the PBOC.

Feb 5, 2020

Alphabet Reports Earnings and Its Fundamentals Remain Stellar
Image Shown: Shares of Alphabet Inc Class C, a top weighted holding in our Best Ideas Newsletter portfolio, continued their upward climb in 2019 and maintained their stellar trajectory. On February 3, Alphabet reported fourth quarter and full year earnings for 2019. The firm’s bottom-line beat consensus estimates, but Alphabet’s top-line miss sent shares modestly lower the next day on Tuesday, February 4. We continue to like Alphabet’s Class C shares as a top weighted holding in our Best Ideas Newsletter portfolio with our fair value estimate sitting at $1,440 per share of GOOG (under our base case scenario) and the top end of our fair value estimate range sitting at $1,800 per share of GOOG (under our optimistic case scenario that’s still deemed reasonable, in our view).

Feb 5, 2020

Amazon Posts Blowout Earnings, Shares Back Near 2018 Highs
Image Shown: After reporting fourth quarter earnings for 2019, shares of Amazon Inc have returned to their 2018 highs as of this writing. On January 30, Amazon reported fourth-quarter earnings for 2019 that handily beat consensus expectations. Shares of AMZN are now trading back near their highs first reached in 2018. We like Amazon’s growth trajectory but don’t include Amazon in the newsletter portfolios due to the enormous uncertainty in the company’s key valuation drivers, which has a magnified impact on changes in its fair value estimate. That’s a product of its high operating leverage. Even a ~50 basis point difference in its expected gross margins versus its realized gross margins, for example, could have a profound impact on its intrinsic value and ultimately share price performance. Our fair value estimate sits at $1,972 per share of Amazon, and our fair value estimate range sits at $1,479-$2,465 per share.

Feb 4, 2020

Visa Reports Earnings and Mildly Adjusts Guidance
Image Shown: Shares of top weighted holding in our Best Ideas Newsletter portfolio Visa Inc continues to outperform the S&P 500. On January 30, Visa reported earnings for the first quarter of its fiscal 2020 (period ended December 31, 2019). While shares sold off on the news, V has since recovered some lost ground and it’s important to keep in mind Visa is up ~42% over the past year as of this writing while the S&P 500 (SPY) was up just ~19% during this period. We continue to like Visa as a top weighted holding in the Best Ideas Newsletter portfolio and given the combination of the firm’s strong long-term technical and fundamental performance (on a historical basis) along with its bright outlook going forward, shares of V could test the upper end of our fair value estimate range which sits at $228 per share.

Jan 31, 2020

Coronavirus May Trigger Long-Anticipated Global Recession
Image: Wuhan New Coronavirus. This was the catalyst that nobody was expecting, a novel coronavirus that nobody had in their economic models. We think global economic activity is slowing as we speak, and the spread of the virus may only accelerate in mainland China and elsewhere. Investors should keep a level head and perhaps think about adding protection to their portfolios before it becomes too expensive.

Jan 31, 2020

Microsoft Continues to Outperform After a Great Earnings Report
Image Source: Microsoft Corporation – Second Quarter Fiscal 2020 IR PowerPoint Presentation. We continue to be impressed with Microsoft’s fundamental performance, and that’s clearly being reflected in its technical performance as the market prices in an ever-optimistic outlook. It won’t be until Microsoft’s technicals turn against the company that we would consider removing shares of MSFT from the Dividend Growth Newsletter portfolio. We like to let our winners run, within reason.

Jan 30, 2020

AT&T Continues to Follow Through With Its Mission
Image Source: AT&T Inc – Fourth Quarter and Full-Year Earnings Presentation. One of our holdings in the High Yield Dividend Newsletter portfolio, AT&T, reported full-year and fourth quarter results for 2019 on January 29. Shares of T sold off modestly on the mixed report (adjusted non-GAAP EPS beat consensus estimates but revenues fell short of expectations), and now shares of T yield ~5.6% as of this writing. We continue to like what we see in AT&T as management is delivering on major value creating initiatives: deleveraging, margin expansion, and ultimately free cash flow growth. More information on the High Yield Dividend Newsletter >>