Valuentum Exclusive Analysis for the Discerning Investor

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Jul 4, 2022

Nelson: I Have Been Wrong About the Prospect of Near-Term Inflationary-Driven Earnings Tailwinds
"Though I have been clearly wrong on my near-term thesis for inflation-driven earnings expansion, we still did great sorting through investment idea considerations. Through late June, for example, the simulated Best Ideas Newsletter portfolio has generated 4-5 percentage points of alpha relative to the S&P 500, as measured by the SPY. The simulated Dividend Growth Newsletter portfolio is down only modestly this year, also performing better than traditional benchmarks. The simulated High Yield Dividend Newsletter is generating “alpha” against comparable benchmarks, and the Exclusive publication continues to deliver, with both capital appreciation ideas and short idea considerations generating fantastic success rates. ESG and options-idea generation have also been great. With all this being said, in the long run, I believe nominal earnings will expand rapidly from 2021 levels, which is why I remain bullish on stocks. I believe markets tend to overestimate earnings in the near term and underestimate them in the long run. The intelligent investor knows, too, that the most money is made during recessions and bear markets, where steady reinvestment and dollar cost averaging help to better position portfolios for higher returns over the longer run. The newsletter portfolios are well-positioned for continued “outperformance,” in our view, and while we may make a few tweaks to them, we’re not making any material changes at this time."

Jun 17, 2022

Qurate Retail Faces Difficult Turnaround Process
Image Source: Qurate Retail Inc – First Quarter of 2022 IR Earnings Presentation. Executive Summary: Qurate Retail Inc is home to several well-known retail brands including QVC and HSN that operate television networks and online marketplaces that sell curated products. The company is contending with several exogenous shocks such as inflationary pressures and supply chain hurdles, while customer engagement levels are on the decline after growing during the initial phases of the COVID-19 pandemic. Qurate Retail has a massive net debt load and sizable annual financing obligations, and its margins have deteriorated substantially of late. Due to its complex share structure and management organization, weak financial position, and lackluster outlook, we are not interested in Qurate Retail’s common or preferred shares at this time. Qurate Retail is too risky for our taste.

Jun 9, 2022

Best Idea Dollar General Beats Consensus Estimates and Raises Guidance in the Face of Substantial Headwinds
Image Shown: Dollar General Corporation’s GAAP net sales rose in the first quarter of fiscal 2022 on a year-over-year basis due to growth in its net store count. Image Source: Dollar General Corporation – May 2022 8-K SEC Filing. As a discount retailer, Dollar General is contending with myriad headwinds though its underlying business is holding up quite well. We continue to view its capital appreciation upside potential quite favorably, and its dividend program offers incremental upside potential. Shares of DG yield ~1.0% as of this writing.

Jun 2, 2022

Shares of Top Biotech Idea Vertex Pharma Volatile But Company Fundamentals Sound
Image Shown: Shares of Vertex Pharmaceuticals Inc have surged higher during the past year. We continue to like the biotech firm in the Best Ideas Newsletter portfolio. The biopharmaceutical space is full of attractive investment opportunities, though early-stage firms without commercialized drug portfolios are quite risky investments given their lack of meaningful revenues and sizable negative cash flows. Vertex Pharmaceuticals, on the other hand, has a commercialized portfolio of therapeutics that treat cystic fibrosis (‘CF’) which enables the biotech firm to generate substantial revenues and cash flows. We include Vertex Pharma as an idea in the Best Ideas Newsletter portfolio.

May 23, 2022

PRESENTATION: AAII Greensboro May Program -- The Ultimate Dividend Growth Investing Tool
PRESENTATION: AAII Greensboro May Program -- The Ultimate Dividend Growth Investing Tool.

Apr 21, 2022

Dividend Growth Idea UnitedHealth Group Boosts Guidance
Image Shown: Dividend growth idea UnitedHealth Group Inc has seen its share price surge higher over the past year. One of our favorite dividend growth ideas is UnitedHealth Group. The company runs an expansive portfolio of domestic health care operations including large health insurance businesses, pharmacy benefits managers (‘PBMs’) and specialty pharmacy businesses, outpatient surgical centers, in-home health care service providers, analytical services, and services geared towards administrative activities, among many other operations involving health care. Its four business reporting segments are Optum Health (national health care delivery platform), Optum Insight (services, analytics, and platforms aimed at generating insights and efficiencies while improving patient outcomes), Optum Rx (portfolio of pharmacy care services), and UnitedHealthcare (portfolio of health insurance businesses). Shares of UNH yield ~1.1% as of this writing.

Apr 20, 2022

Shares of Newsletter Portfolio Idea Johnson & Johnson Off to the Races!
Image Shown: Shares of Johnson & Johnson, an idea in both our Best Ideas Newsletter and Dividend Growth Newsletter portfolios, are shifting higher. On April 19, Johnson & Johnson reported first-quarter earnings for 2022 that missed consensus top-line estimates but beat consensus bottom-line estimates. The company lowered its guidance for 2022, but shares of JNJ rallied during regular trading hours that day as its underlying performance remains strong. J&J suspended guidance for its coronavirus ('COVID-19') vaccine sales, though we want to stress that these sales were not needle-moving as it concerns our estimate of the company’s fair value. The firm was selling the vaccines on a not-for-profit basis and didn’t intend to change that until the end of this year or until 2023 (or potentially never). J&J also pushed through a 7% sequential increase in its dividend on April 19, with 2022 marking its 60th consecutive year of payout increases, earning the firm the coveted Dividend Aristocrat status. We include shares of JNJ in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios. Shares of JNJ yield ~2.5% as of this writing. Johnson & Johnson’s business model is in the process of getting fundamentally altered due to the planned separation of its consumer health business from its pharmaceutical and medical devices operations, which is expected to occur within less than two years. As we have noted in the past, J&J is also steadily working on putting its various legal issues behind it, though its planned business separation along with its legal issues fundamentally altered its proposition as a straightforward dividend growth opportunity. We continue to like J&J in our newsletter portfolios, though we are keeping a close eye on how its business separation strategy will ultimately pan out. Let's dig into the details in this article.

Apr 12, 2022

Best Idea Dollar General Roaring Higher
Image Shown: We like the niche Dollar General Corporation has carved out for itself in the competitive discount retail industry. Image Source: Dollar General Corporation – Fiscal 2021 Annual Report. Though the discount store retail industry is incredibly competitive, we like the niche that Dollar General Corp has carved out for itself by targeting towns and cities in the U.S. with populations of 20,000 or less. These are regions where e-commerce economics are not attractive due to hefty fulfillment costs, and often are underserved in terms of shopping options. Dollar General operates over 18,100 stores across 46 U.S. states and is included as an idea in the Best Ideas Newsletter portfolio. We continue to be big fans of Dollar General. Our fair value estimate stands at $234 per share of DG with room for upside as the top end of our fair value estimate range sits at $281 per share.

Mar 7, 2022

GoodRx’s Modest Q4 Miss, Slowing Revenue Growth Expectations Send Shares Tumbling
Image: Many speculative areas have faced tremendous pressure in recent months from new issues to entities tied to the trend of disruptive innovation. Image Source: TradingView. GoodRx reported weak fourth-quarter 2021 results and issued top-line guidance for 2022 that has reset the market’s long-term growth expectations for the firm much lower. The company’s EBITDA margin outlook also speaks to continued competitive pressures at the company that may only intensify with Amazon a key player in the online pharmacy space. Though GDRX’s free cash flow profile and balance sheet remain healthy, the company’s little to no expected GAAP profits, slowing expected revenue growth, and mounting competition speak to an uphill battle ahead. GDRX’s recently announced $250 million stock buyback program will eat into its healthy balance sheet and may only provide a dead-cat bounce from today’s levels (in the mid-teens per share).

Feb 6, 2022

Weekly: Why We Missed Big on T and FB; Overpriced Staples, Our Call To Action; and More!
In this Valuentum Weekly, in video form, President of Investment Research Brian Nelson, CFA, explains why Valuentum missed big on T and FB, how volatility on names with huge market caps is spiking recklessly, and why the call to action in the book Value Trap remains as relevant as ever given current incentives.