Valuentum Exclusive Analysis for the Discerning Investor

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Sep 24, 2021

Honeywell’s Dividend Growth Supported by Promising Cash Flow Growth Outlook
Image Source: Honeywell International Inc – Second Quarter of 2021 IR Earnings Presentation. We view Honeywell International as one of the best industrial plays out there and include shares of HON as an idea in the Dividend Growth Newsletter portfolio. Honeywell has exposure to the aerospace and downstream energy markets--industries that were hit hard by the coronavirus (‘COVID-19’) pandemic but are now recovering in earnest--and to the proliferation of e-commerce and “smart buildings.” Furthermore, in the event that a bipartisan infrastructure bill currently awaiting approval in the US House of Representatives gets signed into law, Honeywell has exposure to the expected surge in domestic infrastructure investments. Our fair value estimate for Honeywell sits at $240 per share with room for upside as the top end of our fair value estimate range sits at $288 per share. As of this writing, shares of HON yield ~1.7%.

Sep 20, 2021

Dividend Growth Idea Lockheed Martin Has Ample Space Upside
Image Source: Lockheed Martin Corporation – Second Quarter of Fiscal 2021 IR Earnings Presentation. The commercial and military opportunities in the realm of space have been growing at a brisk pace of late, and in our view, the growth runway in this area is immense. Lockheed Martin Corp is a giant defense contractor with a sizable space business that caters to national defense, governmental, and commercial needs. We include Lockheed Martin as an idea in the Dividend Growth Newsletter portfolio, and shares of LMT yield ~3.1% as of this writing. The company has four core business operating segments and ‘Space’ is one of those segments, which generates a sizable amount of its annual sales.

Jun 1, 2021

ICYMI -- Video: Exclusive 2020 -- Furthering the Financial Discipline
In this 40+ minute video jam-packed with must-watch content, Valuentum's President Brian Nelson talks about the Theory of Universal Valuation and how his work is furthering the financial discipline. Learn the pitfalls of factor investing and modern portfolio theory and how the efficient markets hypothesis holds little substance in the wake of COVID-19. He'll talk about what companies Valuentum likes and why, and which areas he's avoiding. This and more in Valuentum's 2020 Exclusive conference call.

May 18, 2021

German Industrial Conglomerate Siemens Remains an Attractive Income Generation Idea
Image Shown: Siemens AG sees the global industrial economy staging a recovery from the COVID-19 pandemic, which in turn supports the firm’s outlook. The company raised its full-year guidance when Siemens published its latest earnings report. Image Source: Siemens AG – Second Quarter of Fiscal 2021 IR Earnings Presentation. Siemens has identified a number of growth avenues and is leaning on its digital capabilities to bring various industrial processes into the 21st Century. Siemens generates strong free cash flow, has a promising growth outlook, and its ‘A-rated’ long-term credit rating is impressive. Shares of SIEGY have been on a nice upward climb during the past year, as investors continue to warm up to its promising growth story. There could be room for substantial upside as the global economy recovers from COVID-19, and investors get paid a nice ~2.5% dividend yield to have exposure to this global industrial powerhouse. We think Siemens could be an interesting income generation idea for consideration.

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 16, 2021

Honeywell Reaffirms Outlook, Dividend Looks Great
Image Source: Honeywell – J.P. Morgan Industrials Conference Presentation. 2021 will be a solid year for Honeywell, but we expect 2022 and 2023 to be even brighter, as some of the company’s revenue initiatives bear fruit in a much healthier industrial marketplace buoyed by greater infrastructure spending. The cost cuts put in place during COVID-19 should help with margin improvement as economic conditions pick up, putting the firm in a position to surprise to the upside. We expect continued dividend growth. Honeywell yields 1.7% at the time of this writing.

Mar 5, 2021

Our Thoughts on Berkshire Hathaway’s Latest Annual Report
Image Shown: Shares of Berkshire Hathaway Inc Class B stock have been on an upward climb since June 2020 with room for additional capital appreciation upside. The top end of our fair value estimate range for BRK.B sits at $275 per share. We continue to like exposure to Berkshire Class B stock in our Best Ideas Newsletter portfolio. The top end of our fair value estimate range sits at $275 per share of BRK.B, indicating the company has room for additional capital appreciation upside as of this writing even after moving higher over the past several months. Just like any investor, Mr. Buffett will not always get it right, but we appreciate his candor when he gets something wrong. Bigger picture, the outlook for the US economy appears strong as public health authorities are utilizing COVID-19 vaccine distribution efforts to help bring an end to the crisis. Mr. Buffett, in his letter, was very upbeat about the US economy. We will end with this comment from the Oracle of Omaha: “Our unwavering conclusion: Never bet against America.”

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!

Feb 2, 2021

General Electric Provides Upbeat Outlook for 2021
Image Shown: An overview of GE’s cash flow forecasts on a divisional basis for 2021. Image Source: General Electric – Fourth Quarter of 2020 IR Earnings Presentation. The ongoing coronavirus (‘COVID-19’) has weighed negatively on the industrial sector for most of 2020, before the space started to recover during the latter part of the year. On January 26, industrial conglomerate General Electric reported fourth quarter earnings for 2020 that beat consensus top-line estimates but missed consensus bottom-line estimates. The company’s business operating segments are broken down into its various GE Industrial divisions (‘Power,’ ‘Renewable Energy,’ ‘Aviation’ and ‘Healthcare’) and GE Capital. What really impressed us was that GE Industrial’s free cash flow came in at $4.4 billion in the final quarter of last year which pushed the segment’s full year free cash flow up to a positive $0.6 billion in 2020. Management cited outperformance at GE’s Healthcare division and the ongoing turnaround at its energy portfolio as being key here during GE’s latest earnings call, which offset significant weakness at its Aviation division.

Jan 29, 2021

Repub from March 5, 2018: The Tragedy of Quantitative Finance
-- Okay – it’s not 2038, but just imagine if this could happen…