Valuentum Exclusive Analysis for the Discerning Investor

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May 24, 2021

Crown Castle Is a Great Income Growth Idea
Image Shown: Crown Castle International Corp has an expansive portfolio of shared wireless infrastructure assets that covers every major market in the US. Image Source: Crown Castle International Corp – First Quarter of 2021 IR Earnings Presentation. We're huge fans of Crown Castle and believe the REIT has a promising dividend growth outlook. Looking ahead, the ongoing buildout of 5G wireless infrastructure in the US, the Internet of Things (‘IoT’) trend, and the potential emergence of smart cities supports the outlook for data demand and ultimately Crown Castle’s ability to grow its cash flows. Its expansive portfolio includes 40,000+ towers, ~80,000 route miles of fiber, and ~80,000 small cell nodes. According to Crown Castle, the REIT has a presence in every major US market. Crown Castle’s contracts generally are long term in nature and come with rent escalators and other provisions that are favorable for the REIT. As of this writing, shares of CCI yield ~2.9%.

May 18, 2021

AT&T Right-Sizing Dividend, WarnerMedia Joining Forces with Discovery
Image Shown: AT&T Inc’s WarnerMedia unit is joining forces with Discovery Inc. This transaction, if it goes through as planned, will create another giant in the video streaming services industry. Image Source: Discovery Inc – Discovery Joining Forces with WarnerMedia IR Presentation. Despite the upcoming rightsizing of its dividend payout in light of a pending spin-off, the telecommunications and media giant AT&T continues to be one of our favorite income generation ideas. We're not making any changes to the newsletter portfolios at this time, and the recent news indicates AT&T’s balance sheet is about to improve significantly.

May 17, 2021

Best Idea Disney’s Outlook Is Bright and Getting Brighter
Image Source: The Walt Disney Company – December 2020 Investor Day Presentation. The Walt Disney Company reported second quarter fiscal 2021 earnings (period ended April 3, 2021) that beat consensus bottom-line estimates but missed consensus top-line estimates. Investors were dismayed that the company’s paid video streaming subscriber base did not grow by as much as expected. However, we are not worried as Disney’s outlook is bright and getting brighter.

Apr 22, 2021

Good News from High Yielding AT&T
Image Source: AT&T. We liked AT&T’s first-quarter results and outlook for 2021 that calls for free cash flow generation to be well in excess of expected cash dividends paid for the year. Investors should be aware of its hefty net debt position, but with a ~7% dividend yield, the company may be hard to pass up for high yield dividend focused investors. We plan to make some tweaks to our valuation model following this report, but our fair value estimate of $34 per share remains unchanged at this time.

Mar 24, 2021

ViacomCBS Makes Big Bet on Streaming
Image Source: ViacomCBS Inc – Fourth Quarter of 2020 IR Earnings Presentation. After Viacom and CBS were reunited in December 2019, the new entity ViacomCBS Inc has finally started to gain some traction on the video streaming front. The service CBS All Access, which has since been rebranded as Paramount+, was largely a dud and did not gain the level of attention that Walt Disney Company’s Disney+ service, AT&T Inc’s HBO Max service, or Netflix's namesake service were able to generate. For background, ViacomCBS’s operations include various TV network and cable TV assets, TV and movie studios, various streaming services, and a book publisher. That includes various CBS networks (CBS, CBS Sports, CBS News), CBS studios, MTV, Comedy Central, Paramount, Nickelodeon, Pluto TV (another video streaming service that is free and ad-supported), BET, CMT, POP TV, half of CW (AT&T owns the remaining 50%), COLORS (focused on India), telefe (focused on Spanish-speaking content), SHOWTIME, and the book publisher Simon & Schuster. However, with ViacomCBS launching Paramount+ this month in the US and various Latin American markets, the service now has a larger slate of content than CBS All Access and is supported by ViacomCBS’ vast library (and most importantly, ViacomCBS has plans to produce dozens of original series for Paramount+ going forward). Paramount+ is leaning on properties such as Star Trek and SpongeBob SquarePants along with reboots of shows like iCarly to create engaging original content. Content is king. The combination of Viacom and CBS helped address that issue and provided the new entity with the scale required to be competitive in this business.

Mar 15, 2021

AT&T’s Video Streaming Growth Story Is Starting to Take Flight
Image Source: AT&T Inc – 2021 Investor & Analyst Day Presentation. On March 12, AT&T hosted its 2021 Analyst & Investor Day event. In conjunction with the event, AT&T issued long-term financial and operational guidance which included a substantial upward revision in its expected HBO/HBO Max subscriber growth over the coming years. We continue to be big fans of AT&T as a high yielding opportunity and include AT&T as an idea in the High Yield Dividend Newsletter portfolio. As of this writing, shares of AT&T yield ~7.0%.

Feb 21, 2021

Two High-Quality REITs Report Earnings: Crown Castle and Digital Realty
Image Shown: Crown Castle International Corp. forecasts that its core financial metrics will continue to grow in 2021. Image Source: Crown Castle International Corp. – Fourth Quarter of 2020 IR Earnings Presentation. To avoid many of the risks inherent when seeking out high-yielding income generating opportunities, we focus on locating firms with resilient business models that can churn out meaningful cash flows in almost any environment. Crown Castle and Digital Realty Trust are two high-quality REITs with nice yields and promising outlooks. We continue to like exposure to both CCI and DLR in the High Yield Dividend Newsletter portfolio.

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 28, 2021

Earnings Roundup of Three High-Yielding Firms: MMM, RTX, VZ
Image Source: 3M Company – Fourth Quarter of 2020 Earnings IR Presentation. The coronavirus (‘COVID-19’) pandemic generated substantial headwinds for the global economy in 2020 and for most businesses large and small, save for many firms operating in the IT sector. However, several large industrial and telecommunications companies are reporting that the outlook for 2021 looks quite bright, relatively speaking, as ongoing vaccine distribution efforts indicate the pandemic will be brought to an end sooner than expected. In this article, let's examine the recent earnings reports from 3M, Raytheon Technologies, and Verizon Communications. Our fair value estimate on S&P 500 stands at 3,530-3,920.

Jan 22, 2021

We Expect Netflix to Turn Into a Free Cash Flow Generating Machine
Image Shown: Netflix Inc’s global paid subscriber base is expected to keep growing at a decent clip going forward, though at a slower pace than in the recent past. Image Source: Netflix Inc – Shareholder Letter covering its fourth quarter and full-year earnings in 2020. The video streaming services industry will continue to experience strong subscriber growth in 2021, and we see room for a number of winners in the space. Original content and scale are essential to remaining relevant, and competitive headwinds are growing as companies seek to replicate the success of Netflix. We think Netflix will eventually turn into a free-cash-flow generating machine, but at the moment, we're big fans of "new" streaming rival Disney and include the latter in the Best Ideas Newsletter portfolio. Disney is the top competitive threat to Netflix, in our view.