Valuentum Exclusive Analysis for the Discerning Investor

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Apr 19, 2021

UnitedHealth Group Raises Guidance After Stellar Earnings Report
Image Shown: We added UnitedHealth Group Inc to the Dividend Growth Newsletter portfolio back on November 27, 2020. Since then, shares of UNH have surged higher, though we are primarily interested in the company’s immense dividend growth potential. We continue to be big fans of UnitedHealth Group and like the company as an idea in the Dividend Growth Newsletter portfolio. Shares of UNH have surged towards the upper end of our fair value estimate range over the past couple of months. When we roll forward our enterprise cash flow model for the new year, we expect UnitedHealth Group’s fair value estimate to increase meaningfully on the back of its improving cash flow growth outlook. As of this writing, shares of UNH yield ~1.3% and its Dividend Cushion ratio stands north of 3.0, highlighting the tremendous strength of its forward-looking dividend coverage.

Apr 8, 2021

The Best Years Are Ahead
The wind is at our backs. The Federal Reserve, Treasury, and regulatory bodies of the U.S. may have no choice but to keep U.S. markets moving higher. The likelihood of the S&P 500 reaching 2,000 ever again seems remote, and I would not be surprised to see 5,000 on the S&P 500 before we see 2,500-3,000, if the latter may be in the cards. The S&P 500 is trading at ~4,100 at the time of this writing. The high end of our fair value range on the S&P 500 remains just shy of 4,000, but I foresee a massive shift in long-term capital out of traditional bonds into equities this decade (and markets to remain overpriced for some time). Bond yields are paltry and will likely stay that way for some time, requiring advisors to rethink their asset mixes. The stock market looks to be the place to be long term, as it has always been. With all the tools at the disposal of government officials, economic collapse (as in the Great Depression) may no longer be even a minor probability in the decades to come--unlike in the past with the capitalistic mindset that governed the Federal Reserve before the “Lehman collapse."

Mar 18, 2021

Cigna Is An Intriguing Health Care Idea
Image Source: Cigna Corporation –2021 Investor Day Presentation. Health care giant Cigna Corporation has a stellar cash flow profile, pristine balance sheet, promising growth outlook, and remains committed to rewarding shareholders. The company initiated a quarterly dividend at the start of 2021 and intends to continue buying back a sizable amount of its stock going forward. Management recently issued favorable guidance that indicates Cigna’s growth story is expected to continue this year as the world emerges from the COVID-19 pandemic. Cigna’s telehealth ambitions are quite intriguing as well. Recent updates at Cigna have placed the health care company on our radar.

Feb 8, 2021

Stock Market Outlook for 2021
2020 was one from the history books and a year that will live on in infamy. That said, we are excited for the future as global health authorities are steadily putting an end to the public health crisis created by COVID-19, aided by the quick discovery of safe and viable vaccines. Tech, fintech, and payment processing firms were all big winners in 2020, and we expect that to continue being the case in 2021. Digital advertising, cloud-computing, and e-commerce activities are set to continue dominating their respective fields. Cybersecurity demand is moving higher and the constant threats posed by both governments (usually nations that are hostile to Western interests) and non-state actors highlights how crucial these services are. Retailers with omni-channel selling capabilities are well-positioned to ride the global economic recovery upwards. Green energy firms will continue to grow at a brisk pace in 2021, though the oil & gas industry appears ready for a comeback. The adoption of 5G wireless technologies and smartphones will create immense growth opportunities for smartphone makers, semiconductor players and telecommunications giants. Video streaming services have become ubiquitous over the past decade with room to continue growing as households “cut the cord” and instead opt for several video streaming packages. We’re not too big of fans of old industrial names given their capital-intensive nature relative to capital-light technology or fintech, but there are select names that have appeal. Cryptocurrencies have taken the market by storm as we turn the calendar into 2021, but the traditional banking system remains healthy enough to withstand another shock should it be on the horizon. Our fair value estimate of the S&P 500 remains $3,530-$3,920, but we may still be on a roller coaster ride for the year. Here’s to a great 2021!

Jan 27, 2021

ALERT: Raising Cash in the Newsletter Portfolios
Our research has been absolutely fantastic for a long time, but 2020 may have been our best year yet. With the S&P 500 trading within our fair value estimate range of 3,530-3,920 (and the markets rolling over while showing signs of abnormal behavior), we're raising the cash position in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to 10%-20%. For more conservative investors, the high end of this range may even be larger, especially considering the vast "gains" from the March 2020 bottom and the increased systemic risks arising from price-agnostic trading (read Value Trap). The individual holdings will be reduced in proportion to arrive at the new targeted cash weighting in the respective simulated newsletter portfolios. The High Yield Dividend Newsletter and Dividend Growth Newsletter are scheduled for release February 1. We'll have more to say soon.

Jan 21, 2021

UnitedHealth Group Is a Rock-Solid Dividend Growth Opportunity
Image Shown: Shares of UnitedHealth Group Inc, which we added to our Dividend Growth Newsletter portfolio back on November 27, continue to climb higher. The top end of our fair value estimate for UnitedHealth Group sits at $401 per share. On January 20, UnitedHealth Group issued fourth quarter and full-year results for 2020 that beat both consensus top- and bottom-line estimates. The healthcare giant reported a 6% annual increase in its GAAP revenues in 2020, with its ‘Premiums,’ ‘Products’ and ‘Services’ sales all reporting meaningful increases. Its GAAP earnings from operations grew by 14% annually in 2020, though we caution there is some noise due to the deferral of certain medical procedures, a result of the ongoing coronavirus (‘COVID-19’) pandemic. UnitedHealth Group is an exciting healthcare play with substantial dividend growth upside. As global health authorities continue to work toward getting the pandemic under control, a process aided by the ongoing distribution of COVID-19 vaccines, the outlook for the healthcare sector and global economy at-large should continue to improve going forward. We like having exposure to UnitedHealth Group in the Dividend Growth Newsletter portfolio.

Jan 15, 2021

Walgreens Begins to Recover
Image Shown: Shares of Walgreens Boots Alliance Inc are beginning to recover. Shares of Walgreens Boots Alliance are on the rise after the company recently posted a solid earnings report while also reaching a big divestment deal. As we recently covered, Walgreens is divesting most of its European-focused wholesale pharmaceutical distribution business to AmerisourceBergen. Please note Walgreens has a material strategic stake in AmerisourceBergen’s equity which will grow in terms of total shares once the divestment closes. That said, competitive headwinds are growing for Walgreens and the pharmacy space more broadly as Amazon recently launched its own online pharmacy. We are keeping an eye on the space.

Jan 9, 2021

Walgreens Sells European-Focused Wholesale Pharmaceutical Distribution Business to AmerisourceBergen
Image Shown: Walgreens Boots Alliance Inc is undergoing a major transformation. Part of that strategy involves divesting its European wholesale pharmaceutical distribution business, Alliance Healthcare, to its strategic partner AmerisourceBergen Corporation. Image Source: Walgreens Boots Alliance Inc – Fourth Quarter and Full Year Fiscal 2020 IR Earnings Presentation. On January 6, Walgreens Boots announced it had reached a deal with AmerisourceBergen Corp to sell the "the majority of” its European-focused wholesale pharmaceutical distribution business, Alliance Healthcare, for about $6.5 billion ($6.275 billion in cash along with 2 million shares of ABC). Please note that Walgreens already owns a sizable stake in AmerisourceBergen as the former owned ~28% of the latter’s outstanding shares as of August 31, 2020. The deal is expected to close by the end of AmerisourceBergen’s fiscal 2021 (at the end of September 2021). The transaction should positively benefit both parties. Walgreens gets a nice cash infusion to help upgrade its core operations while AmerisourceBergen gains significant scale and greater exposure to European markets. The existing arrangements between Walgreens and AmerisourceBergen should assist both firms in realizing their targeted synergies, at least in theory, though the healthcare sector is inherently complex. We continue to prefer exposure to the "pharmacy-oriented" space through one of our favorite dividend growth ideas UnitedHealth Group. We also include Johnson & Johnson and the Healthcare Select SPDR ETF in the newsletter portfolios.

Dec 29, 2020

GoodRx Has Potential Capital Appreciation Upside But Long-Term Threats Loom
Image Source: GoodRx Holdings Inc – December 2020 IR Presentation. GoodRx Holdings Inc is a disrupter in the US pharmacy space, and the company went public in September 2020. The firm’s digitally-oriented prescription drug pricing platform generates strong normalized operating income and allows for an impressive cash flow profile. Supported by its pristine balance sheet, GoodRx has the financial firepower to expand into adjacent businesses to further extend its growth runway. While meaningful competitive threats are a concern, such as those posed by Amazon Inc entering the online pharmacy space, GoodRx has significant competitive advantages over its peers and benefits from the network effect. The company’s active monthly user base has grown at an impressive clip during the past several years, and the firm has a number of avenues to generate meaningful upside. The company’s total addressable market is enormous.

Dec 17, 2020

UnitedHealth Group’s Dividend Growth Potential is Impressive
Image Shown: UnitedHealth Group Inc has a tremendous dividend growth runway, one that is supported by its high-quality cash flow profile, pristine balance sheet, and improving near-term outlook. Shares of UNH have staged an impressive recovery over the past several months since crashing in March 2020 due to headwinds arising from the ongoing COVID-19 pandemic. We added UnitedHealth Group to our Dividend Growth Newsletter portfolio on November 27, 2020. On November 27, we added UnitedHealth Group to the Dividend Growth Newsletter portfolio. The company has an “EXCELLENT” Dividend Growth rating as the firm is well-positioned to push through meaningful dividend increases in the coming years. Additionally, UnitedHealth Group earns an “EXCELLENT” Dividend Safety rating as its Dividend Cushion ratio sits at 3.1, and please keep in mind these metrics factor in our expectations that the company will meaningfully grow its payout going forward. As of this writing, shares of UNH yield ~1.5%. We like UnitedHealth Group’s stellar cash flow profile, pristine balance sheet, improving near-term outlook and resilient business model. During the ongoing coronavirus (‘COVID-19’) pandemic, the company’s financial performance has remained rock-solid, too.