Valuentum Exclusive Analysis for the Discerning Investor

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May 27, 2022

Broadcom Buying VMware as “Empire Building” Streak Continues
Image Shown: Broadcom Inc is acquiring VMware Inc and the deal will significantly increase its enterprise software business. Image Source: Broadcom Inc and VMware Inc - May 2022 IR Presentation. Continuing with its acquisitive streak, the semiconductor and enterprise software giant Broadcom Inc announced on May 26 that it would acquire hybrid cloud services provider VMware Inc through a cash-and-stock deal that values VMware at ~$61 billion. Additionally, Broadcom will assume ~$8 billion in net debt from VMware. This follows in the footsteps of Broadcom’s $18.9 billion deal to acquire CA Technologies in 2018 and its $10.7 billion deal to acquire the enterprise security business of then-Symantec, now NortonLifeLock Inc, in 2019. Under the leadership of Hock Tan, Broadcom’s CEO since 2006, the company has built itself into a tech powerhouse through a series of acquisitions. In 2018, Broadcom formally ended its attempt to acquire Qualcomm Inc in the face of antitrust concerns and adjusted its strategy accordingly. By growing its enterprise software business, namely through acquisitions, Broadcom was largely able to avoid antitrust concerns. However, it remains to be seen if regulators will give their blessing to this pending acquisition.

May 12, 2022

Dividend Growth Idea Qualcomm Beats Estimates; Near Term Guidance Incredibly Bright
Image Shown: Dividend growth idea Qualcomm Inc has a stellar cash flow profile. Image Source: Qualcomm Inc – 10-Q SEC filing covering the Second Quarter of Fiscal 2022. Qualcomm recently reported second quarter earnings for fiscal 2022 (period ended March 27, 2022) that beat both consensus top- and bottom-line estimates. The company is a leader in the technologies relating to 5G wireless, Internet of Things (‘IoT’) trend, semi-autonomous and autonomous driving, and handset operations. We include Qualcomm as an idea in the Dividend Growth Newsletter portfolio as we view its dividend strength and payout growth outlook quite favorably. Shares of QCOM yield ~2.3% as of this writing. The firm’s latest earnings update and near term guidance reinforces our bullish view towards the name.

Apr 22, 2022

ESG Newsletter Portfolio Idea ASML Holding May Further Boost Longer Term Guidance
Image Shown: How ASML Holding Inc’s photolithography systems are used to produce semiconductor components, including the most cutting edge “chips” along with more mature semiconductor components. Image Source: ASML Holding Inc – Fiscal 2021 Annual Report. The maker of advanced photolithography systems that are used to produce the most cutting edge semiconductor components or “chips” is the Dutch firm ASML Holding NV. It has a virtual monopoly at the high-end of this market due to its technological prowess in this space and focus on R&D. The firm also produces photolithography systems to make more mature chips and offers services that are primarily geared towards its installed systems base. ASML Holding reported first quarter earnings for fiscal 2022 (period ended April 3, 2022) on April 20 that beat both consensus top- and bottom-line estimates and its order backlog remains robust.

Mar 21, 2022

ASML Holding Is a Tremendous Enterprise, Holds Fantastic Competitive Position
Image Source: ASML Holding NV – 2021 Annual Report. The Dutch firm ASML Holding NV makes the photolithography systems used by semiconductor foundries to produce “chips” that power the modern economy. In part due to its immense technological lead over its competitors, ASML Holding effectively has a monopoly at the high end of its industry, meaning its photolithography systems are required to produce the most advanced semiconductor components. The company also offers semiconductor equipment services and stands to gain immensely from ongoing growth in its installed equipment base. We're huge fans of the company.

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

Net Cash Rich Micron Technology Beats Estimates and Issues Favorable Near Term Guidance
Image Shown: An overview of Micron Technology’s outlook for the industry and its own operations for 2022 and beyond. Image Source: Micron Technology – First Quarter of Fiscal 2022 IR Earnings Presentation. On December 20, Micron Technology reported first quarter earnings for fiscal 2022 (period ended December 2, 2021) that beat both consensus top- and bottom-line estimates. Underlying demand for Micron Technology’s DRAM, NAND, and NOR offerings (used as memory solutions in personal computers, automobiles, data centers, smartphones, and various electronics devices) remained robust last fiscal quarter. The company has done a great job navigating supply chain hurdles and semiconductor component and equipment shortages in the wake of the coronavirus (‘COVID-19’) pandemic to continue meeting booming customer demand. Shares of Micron Technology surged higher after it published its latest earnings report December 20 (and they are now trading in the mid-$90s at the time of this writing). In our view, the big share price increase was largely due to the memory solutions provider issuing favorable near term guidance covering the current fiscal quarter, indicating that its strong performance of late is expected to continue in the near term. Though shares may appear cheap on a forward earnings basis, we caution members that the industry Micron Technology operates within is ultra-competitive and exposed to tremendous pricing competition and cyclical swings. Though technically (its chart) looks attractive at this time, long-term investors should be careful.

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.

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.

Nov 8, 2021

ASML Holding’s Bright Growth Outlook
Image Shown: Shares of ASML Holding NV are booming higher as demand for its photolithography systems, a crucial part of the semiconductor supply chain, continues to grow at a robust pace. ASML Holding is a tremendous way to play the ongoing boom in semiconductor demand. The firm’s medium-term growth targets are fantastic and supported by surging net bookings for its photolithography systems (clearly there is ample demand here for ASML Holding’s offerings). With a pristine balance sheet, shareholder friendly management team, stellar free cash flow generating abilities, and promising growth outlook, ASML Holding has a lot going for it. The company is a good fit for the ESG Newsletter portfolio, in our view, as ASML Holding scores well on our 1-100 (100 being the best) ESG rating system (94 out of 100).

Nov 5, 2021

Qualcomm Explodes Higher Towards Our Fair Value Estimate; Semiconductor Supply Chain Update
Image Source: Qualcomm's shares have surged toward our fair value estimate. We continue to like shares of this dividend growth giant. Qualcomm remains a free-cash-flow generating juggernaut that has a very healthy dividend. Management surprised the market to the upside with its fiscal fourth-quarter report and guidance and indicated that supply chain issues are “playing out exactly as (they) planned,” as the firm expects supply and demand to be aligned by the second half of 2022. We were pleased by the news and are reiterating our $170 per share fair value estimate and the company as an idea for long-term dividend growth investors.