Valuentum Exclusive Analysis for the Discerning Investor

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Feb 25, 2021

DermTech Revolutionizing the Cancer Detection Market
Image Source: DermTech Inc – Corporate IR Presentation for the first quarter of 2021. DermTech is an innovator in the skin cancer and skin cancer risk detection market. The company's DermTech Melanoma Test offering that is built on its Pigmented Lesion Assay (‘PLA’) test is cheaper, more effective, and more patient friendly than traditional skin cancer detection offerings. The total addressable market (‘TAM’) for the company’s currently approved PLA test--and PLAplus test if that offering receives regulatory approval--is estimated to stand at ~$2.5 billion (or more) in the US alone. In our view, there is room for DermTech to take a sizable chunk of that market, especially as the firm scales up its sales force. DermTech is one for the radar of capital appreciation seeking investors.

Feb 25, 2021

Public Storage’s Traditional Free Cash Flow Coverage of the Dividend Is Unique for a REIT
Image Source: Mike Mozart. In light of Public Storage’s core FFO coverage of the payout and its traditional free cash flow coverage of the payout, we think its dividend is about as healthy as any REIT’s gets. Public Storage is also one of the highest-rated REITs by the credit rating agencies, with Standard & Poor’s and Moody’s assigning an A credit rating and A2 credit rating on its senior debt, respectively. Shares yield ~3.3%, and we continue to like exposure to this rock-solid dividend-paying REIT in the High Yield Dividend Newsletter portfolio.

Feb 25, 2021

Realty Income’s Dividend Track Record Unfazed by Its Weakened Theater Exposure
Image Source: Realty Income. We include Realty Income, “The Monthly Dividend Company,” in the Dividend Growth Newsletter portfolio, and the company’s long-term dividend growth track record has been fantastic, posting 90+ consecutive quarterly dividend increases. Though the REIT is capital-market dependent, its investment-grade corporate debt ratings (A3/A-) support its ability to tap the debt and equity markets when needed, as it has been doing during this COVID-19 crisis. Shares of Realty Income yield ~4.5% at the time of this writing.

Feb 24, 2021

Garbage Hauler Republic Services Expects Record Year in 2021
Image Source: Republic Services. There are few things as certain as death and taxes, but garbage may be one of them. One of our favorite ideas within the municipal solid waste coverage is Republic Services, a holding in the Dividend Growth Newsletter portfolio. We love its free cash flow generating ability, visibility into future revenue, enviable position with respect to disposal capacity, CPI-based book of business, and exposure to fast-growing economic areas in the US.

Feb 24, 2021

Home Depot Shows the Home Has Never Been More Important
Image Source: Home Depot. On Tuesday, February 23, Home Depot reported fiscal fourth-quarter 2021 results (period ending January 31, 2021) that came in better than consensus estimates across the board. Not only did the top- and bottom- lines beat, but comparable store sales growth of 24.5% exceeded even some of the most optimistic forecasts for the home improvement retailer during the period. The average ticket price and the number of transactions advanced, while both professional (“Pro”) and Do-It-Yourself (“DIY”) customer revenue increased at a double-digit pace in the quarter. Home Depot also raised its dividend 10% and now yields ~2.5% on a forward-looking basis ($6.60 per-share dividend on an annualized basis). We continue to like the home improvement retailer as a holding in the Dividend Growth Newsletter portfolio.

Feb 23, 2021

Innovative Fuel Cell Company Ceres Power Has a Stellar Growth Outlook
Image Source: Ceres Power Holdings plc – Interim 2020 Results IR Presentation. UK-based Ceres Power is a pioneer in the fuel cell industry, with its SteelCell technology leading the way. The company has historically been unprofitable, though it aims to create a sizable high-margin licensing business over the coming years. Ceres Power is working with its strategic partners on pilot projects that aim to prove the viability of its technology. This past December, Bosch, one of Ceres Power’s strategic partners and largest shareholders, announced that starting in 2024, it would commence commercial-level production of fuel cells utilizing Ceres Power’s technology. Shares of Ceres Power are on a powerful upward trend of late as its cash flow growth trajectory is now quite promising. The firm’s net cash position (at the end of June 2020) will help the company cover its cash flow outspend as Ceres Power scales up its licensing business while continuing to make major R&D investments. Current and future support from national governments worldwide underpins the promising outlook for the fuel cell industry. Capital appreciation seeking investors should keep Ceres Power on their radar.

Feb 23, 2021

Korn Ferry Leaps Higher Toward Our Fair Value Estimate
Image Shown: Korn Ferry's stock has surged since it registered a 9 on the Valuentum Buying Index. The company is also included as a holding in the Best Ideas Newsletter portfolio. On December 11, 2020, we raised our fair value estimate of Korn Ferry to $66 per share and assigned it a 9 on the Valuentum Buying Index, one of the highest ratings on our system. Shares at the time were trading at ~$41 each. The company’s equity has surged in the past few weeks, with shares now changing hands at $60+ each. We still believe Korn Ferry’s stock has room to run higher, and the company will remain a holding in the Best Ideas Newsletter portfolio.

Feb 21, 2021

Johnson & Johnson’s COVID-19 Vaccine Candidate Nears the Finish Line
Image Source: Johnson & Johnson – Fourth Quarter of Fiscal 2020 IR Earnings Presentation. We appreciate all the hard work Johnson & Johnson and its partners have put towards developing a safe and viable COVID-19 vaccine candidate. Johnson & Johnson issued favorable guidance for fiscal 2021 when it reported its latest earnings aided by expectations that its medical devices business will recover this fiscal year along with sustained strength in its core pharmaceutical sales according to management commentary given during the related earnings call. We continue to like exposure to Johnson & Johnson in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios.

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 21, 2021

Xpel Is an Intriguing Play on the Auto Industry
Image Shown: Most of Xpel Inc’s business is built around its paint protection film products for automobiles. Image Source: Xpel Inc - November 2020 IR Presentation. Xpel has a pristine balance sheet (nice net cash position), strong cash flow profile, ample growth opportunities, and a plan to boost its margins. The company primarily sells paint protection film products for automobiles, and its outlook appears quite promising as the firm is moving into adjacent areas while putting up rock-solid performance of late. We are highlighting Xpel given its potential for additional capital appreciation upside, though we caution shares of XPEL are up almost four-fold over the past year as of the middle of February 2021.