Valuentum Exclusive Analysis for the Discerning Investor

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Jan 27, 2022

Apple Blows Past Expectations in Fiscal First Quarter!
Image Source: Valuentum. On January 27, 2022, Apple put up one of the best quarters by any company in history and a record for the Cupertino-based iPhone-making giant. Revenue for the quarter ending December 25, 2021, of $123.9 billion advanced 11% on a year-over-year basis, while quarterly earnings per share came in at $2.10. The top line beat expectations by more than $5 billion, even with supply chain hurdles, and the bottom-line beat of $0.20 per share was more than 10%, a huge delta considering the size of the company. We’re viewing the report very positively, and we think the strong performance may ease some broader market concerns. Apple’s gross and operating margins looked healthy, and only performance in its iPad division came in a bit light, but this was almost entirely driven by supply chain issues. Apple generated a solid $19.5 billion in revenue from its ‘Services’ division during the period, up from $15.8 billion in the year-ago quarter, showcasing its ever-growing and “sticky” installed base. Warren Buffett is a big owner of Apple’s stock, and we continue to be in favor of buybacks at Apple, too, even at these price levels. Though Apple’s market capitalization is sizable, we value shares close to $190 each at the high end of our fair value estimate range. Apple remains one of our favorite ideas in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio.

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.

Dec 10, 2021

Dividend Increases/Decreases for the Week December 10
Let's take a look at companies that raised/lowered their dividend this week.

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 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 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.

Nov 3, 2021

Large Cap Growth Has More Room To Run
“The stylistic area of large cap growth has been one of our favorite areas because of the strong net cash rich, free cash flow generating, secular growth powerhouses that make up much of the space. The image is a rundown of the key Valuentum statistics for the top 15 holdings of the Schwab U.S. Large Cap Growth ETF (SCHG). We believe where large cap growth goes, so does the broader market, considering the hefty weightings of some of these stocks in other broad-based indices. Based on the high end of our fair value estimate range for this group of bellwethers, the broader U.S. markets still have room to run, to the tune of 7%+, despite the many highs already reached during 2021. Though traditional valuation multiples may seem stretched by most measures, many market bellwethers have huge net cash positions and tremendous free cash flow growth potential. We expect the equity markets to continue to be led by large cap growth.” – Brian Nelson, CFA

Oct 29, 2021

Apple Remains a Free Cash Flow Generating Powerhouse
Image Shown: Apple Inc remained a free cash flow generating powerhouse in fiscal 2021. Key line-items are underlined in red and blue. Image Source: Apple Inc – Fourth Quarter of Fiscal 2021 Financial Supplement with additions from the author. Apple is not immune to the headwinds facing global supply chains, though its fortress-like balance sheet and stellar free cash flow generating abilities should enable the firm to ride out near-term hurdles with its bright growth trajectory intact. We are huge fans of the tech behemoth and continue to like shares of AAPL as an idea in both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio.