Valuentum Exclusive Analysis for the Discerning Investor

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Nov 19, 2021

Shares of Dividend Growth Idea Qualcomm Surge Higher
Image Shown: Shares of dividend growth idea Qualcomm Inc have skyrocketed since the start of November in the wake of its latest earnings update and favorable guidance put out during a recent investor day event. Over the next decade, dividend growth idea Qualcomm expects its addressable market opportunity will grow by $100 billion, reaching $700 billion, according to guidance put out during a big Investor Day event held on November 16. We appreciate Qualcomm’s ever-expanding growth runway and include shares of QCOM as an idea in the Dividend Growth Newsletter portfolio. On November 3, Qualcomm reported fourth-quarter fiscal 2021 earnings (period ended September 26, 2021) that beat both consensus top- and bottom-line estimates. Additionally, Qualcomm provided strong guidance for its first-quarter fiscal 2022 in conjunction with that report. Shares of Qualcomm have been off to the races since then, and as of this writing, shares of QCOM yield ~1.5%.

Nov 19, 2021

Cisco Systems Posts Solid Earnings Update; Supply Chain Hurdles Impacting Near Term Outlook
Image Source: Cisco Systems Inc – First Quarter of Fiscal 2022 IR Earnings Presentation. On November 17, Cisco Systems reported first quarter earnings for fiscal 2022 (period ended October 30, 2021) that missed consensus top-line estimates but beat consensus bottom-line estimates. Shares of CSCO fell initially after its latest earnings update was published due to its near-term guidance coming in a tad softer than expected, though we caution that this is primarily due to supply chain headwinds negatively impacting Cisco Systems and the networking hardware industry more broadly. As global health authorities work towards bringing the coronavirus (‘COVID-19’) pandemic to an end worldwide, the supply chain situation should improve going forward. We include Cisco Systems as an idea in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios. As of this writing, shares of CSCO yield ~2.6%.

Nov 19, 2021

Update: Johnson & Johnson Is A Stellar Company With Ample Upside
Image Source: Johnson & Johnson – Third Quarter of Fiscal 2021 IR Earnings Presentation. We view Johnson & Johnson's capital appreciation and dividend growth upside potential quite favorably. The top end of our fair value estimate range sits at $206 per share of JNJ. In this article, we cover Johnson & Johnson's stellar financial performance, recent guidance boosts, and some of its legal hurdles. Johnson & Johnson announced on November 12 that it would spinoff its consumer-facing operations while retaining its medical devices and pharmaceutical operations.

Nov 18, 2021

Shares of Dividend Growth Idea Home Depot Roar Higher After Latest Earnings Update
Image Shown: Shares of dividend growth idea Home Depot Inc have surged higher year-to-date on the back of the home improvement retailer’s stellar operational performance and impressive free cash flow generating abilities. We liked what we saw in Home Depot’s latest earnings report published on November 16. Demand for home improvement activities appears to be holding up well, even as lockdown measures related to the COVID-19 pandemic ease up across North America. The outlook for housing activity and construction demand more broadly is quite bullish for several reasons including the need for US housing supply to catch up with new household formation and the large $1+ trillion US infrastructure fiscal stimulus bill that was recently signed into law. Home Depot has exposure to this upside via the Pro side of its home improvement retailing operations and its recently enlarged MRO business. We view Home Depot’s dividend growth trajectory quite favorably and continue to like shares of HD as an idea in the Dividend Growth Newsletter portfolio. In light of better-than-expected fundamental performance of late, we may tweak our cash flow valuation model of the firm. As of this writing, shares of HD are trading near the top end of our fair value estimate range (which currently sits at $397 per share).

Nov 17, 2021

Asset Allocators Fail, Advisors Should Pick Stocks, Save Investors $34 Billion Annually
Image: Most asset allocators can’t even keep pace with the underperforming 60/40 stock/bond portfolio. Highlight added by author. Image Source: Wealth Management. Let’s get this industry back on track. This isn’t about going all-in on cryptoassets or being reckless with one’s capital the past 10 years, but merely picking stocks as a risk/wealth management strategy that approximated the S&P 500 for the past 10 years, and how that has crushed not only the best that quant has had to offer in small cap value but also indexing and asset allocation. One hundred and seventy percentage points of difference relative to the 60/40 stock/bond portfolio, which itself beat many of the “best” asset allocators out there!!! This isn’t about taking on more risk, but rather that active stock selection should be viewed in the same vein as asset allocation. Why do we continue to publish the obviously-biased research in favor of indexing and asset allocation when stock selection could have delivered so much more for investors while saving them billions in annual fees from ETFs, etc. Today, the SEC has a lot on its plate regarding SPACs, cryptocurrency, new issues, ETF approvals and beyond, but in our view, the SEC shouldn’t necessarily be prioritizing 2 and 20 fees more than the index-fund fee chain, and it shouldn’t necessarily be trying to eliminate payment for order flow (PFOF) any more than it should seek to eliminate low-cost index funds. Let us not kid ourselves: It's clear why index funds and passive is winning -- the fees are tremendous! All things considered, if investors want to believe risk is volatility and suffer with indexing and asset allocators, that is their prerogative, but what worked in the past (deviations from equity selection as in the 60/40 stock/bond portfolio) bolstered by high interest rates in the 1980s is far from relevant today (and making up alternative assets isn't going to help). We don’t need more indexing and asset allocation books these days. We need more common sense. Stop selling index funds and start trying to help investors.

Nov 15, 2021

Hut 8 Mining Is an Interesting Play on Cryptocurrencies
Image Source: Hut 8 Mining Corporation – November 2021 IR Presentation. Executive Summary: We are intrigued by Hut 8 Mining’s business model. By growing its bitcoin balance over time and covering its operating expenses by lending out its bitcoin hoard, generating so-called fiat yield, Hut 8 Mining is effectively a bet that a combination of growth in the price of bitcoin and growth in its bitcoin hoard will provide a major boost to its net asset value (‘NAV’) over time. Should the price of bitcoin tank, however, that would weigh negatively on its business, though things would likely not be as bad as it first appears given that Hut 8 Mining is set up to make money in almost every bitcoin pricing environment. As long as there is investor demand out there to borrow its bitcoins, and that broad interest in cryptocurrencies holds up well going forward, Hut 8 Mining should be able to continue growing its revenue as it grows the amount of bitcoin it can lend out on average per quarter. Obviously, of course, the firm would do better if the price of bitcoin stays the same (currently at roughly USD$64,700 for one bitcoin as of this writing) or increases. From our perspective, Hut 8 Mining is better positioned to capitalize on the cryptocurrency craze, in our view, than many of the other firms out there that are mining and continuously selling off their bitcoin holdings or actively buying bitcoin on the open market seeking to flip those alternative digital assets for a profit down the road (the “greater fool theory” in action). We are keeping an eye on Hut 8 Mining, though in this particular case, we must caution that the intrinsic value of alternative digital currencies like bitcoin is zero. The value is entirely in the eyes of the beholder.

Nov 12, 2021

Dividend Increases/Decreases for the Week November 12
Let's take a look at companies that raised/lowered their dividend this week.

Nov 11, 2021

Musings on Veterans Day
Image Source: The US Army. American assault troops in a landing craft huddle behind the protective front of the craft as it nears a beachhead, on the Northern Coast of France. Smoke in the background is Naval gunfire supporting the land. 6 June 1944. Let's take a few moments to reflect on military history this Veterans Day.

Nov 9, 2021

Best Idea Berkshire Hathaway Moving Higher!
Image Shown: Shares of Berkshire Hathaway Inc Class B have been on a nice upward climb over the past year. On November 6, the industrial and insurance conglomerate Berkshire Hathaway Inc (BRK.A) (BRK.B) reported third-quarter 2021 earnings. We liked what we saw in its latest earnings update as most of its business segments reported strong results, save for some of its insurance businesses which took a hit from major weather events and headwinds resulting from more drivers being on the road. Shares of Berkshire Hathaway Class B (ticker: BRK.B) are included as an idea in the Best Ideas Newsletter portfolio.

Nov 8, 2021

ALERT: High Yield Dividend Newsletter Portfolio Changes
Image: Mike Cohen. Calendar third-quarter results were solid for constituents in the High Yield Dividend Newsletter portfolio, and we look forward to a bright 2022!