Valuentum Exclusive Analysis for the Discerning Investor

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Sep 21, 2020

Public Storage Rebounds and Its Financials Remain Strong
Image Shown: Shares of Public Storage have recovered a considerable amount of lost ground since the pandemic-induced drop in March 2020. We continue to like Public Storage as a holding in our High Yield Dividend Newsletter and are big fans of self-storage companies with significant exposure to the US. The self-storage real estate investment trust (‘REIT’) Public Storage is included as a holding in our High Yield Dividend Newsletter portfolio. We strongly appreciate its free cash flows, which are relatively rare in the REIT industry given that the growth-related capital expenditures of most REIT’s tend to be enormous. Shares of PSA have rebounded strongly off their March 2020 lows and yield ~3.6% as of this writing.

Sep 21, 2020

CubeSmart Remains Rock-Solid
Image Shown: An overview of CubeSmart’s core geographical focus. We continue to like CubeSmart as a holding in our High Yield Dividend Newsletter portfolio. Image Source: CubeSmart – September 2020 IR Presentation. One of our favorite industries as it relates to locating high-quality high-yielding companies with promising dividend growth runways is the self-storage real estate investment trust (‘REIT’) space, particularly companies with operations primarily (if not entirely) in the US. Within this industry, CubeSmart is one of our favorites and remains a holding in our High Yield Dividend Newsletter portfolio. Shares of CUBE yield ~4.0% as of this writing. The self-storage REIT continued to make good on its dividend obligations during the coronavirus (‘COVID-19’) pandemic, a task made easier through CubeSmart’s ability to generate meaningful free cash flows. Unlike most other REITs, REITs operating in the self-storage space tend to be able to generate substantial free cash flows, and CubeSmart is no exception as we cover in this note.

Aug 17, 2020

CyrusOne Is a High-Quality Data Center REIT
Image Shown: CyrusOne Inc’s financials and near-term growth outlook held up well during the ongoing pandemic, all things considered. Image Source: CyrusOne Inc – Second Quarter of 2020 IR Earnings Presentation. One of the newest additions to our High Yield Dividend Newsletter portfolio is CyrusOne, a data center real estate investment trust (‘REIT’). Demand for data centers has been extremely strong during the ongoing coronavirus (‘COVID-19’) pandemic as employees are often working from home (driving up demand for productivity programs which in turn is driving up data consumption worldwide) while demand for data-hungry video streaming services has surged. Over the long haul, we like the outlook for the industry, and more broadly, we prefer companies supported by secular growth tailwinds.

Aug 12, 2020

Amazon Secures Big Win in the Online Grocery Market
Image Shown: Shares of Amazon have surged over the past year. Compared to their March 2020 lows, shares of AMZN have almost doubled as of this writing on August 10, 2020. On July 30, Amazon reported second-quarter earnings for 2020 that beat consensus top- and bottom-line estimates by a mile. As of this writing, shares of AMZN have almost doubled since hitting their March 2020 lows as Amazon’s lines of business were well-prepared to ride out the storm created by the ongoing coronavirus (‘COVID-19’) pandemic, assisted by the firm’s pristine balance sheet.

Aug 10, 2020

Digital Realty Boosts Guidance, Extends Growth Runway
Image Shown: An overview of Digital Realty Trust Inc’s asset base. Image Source: Digital Realty Trust Inc – Second Quarter of 2020 IR Earnings Presentation. Data center real estate investment trusts (‘REITs’) are well-positioned to ride out the storm created by the ongoing coronavirus (‘COVID-19’) pandemic due to surging demand for cloud computing services, which in turn is driving up demand for data centers. In short, data centers are primarily facilities that house server farms along with vast amounts of fiber-optic cables that interconnect with existing networks. These facilities form the backbone of modern IT infrastructure. We include Digital Realty Trust Inc (DLR) as a holding in both our Dividend Growth Newsletter and High Yield Dividend Newsletter portfolio, and continue to like the name. Shares of DLR are up ~32% year-to-date as of this writing, and that does not include meaningful dividend considerations as shares of DLR yield ~2.8% as of this writing. In mid-July, we significantly raised our fair value estimate for shares of DLR given its improving outlook, with the top end of our fair value estimate range sitting at $181 per share.

Jul 8, 2020

Realty Income Updates Investors
Image Source: Realty Income Corporation – July 2020 Institutional Investor Presentation. The real estate investment trust Realty Income recently provided investors with some key financial and operational updates. Realty Income primarily invests in single-tenant commercial properties in the US, Puerto Rico, and the UK, and we include shares of O as a holding with a modest weighting in the Dividend Growth Newsletter portfolio. Most of Realty Income’s tenants have continued to pay rent during the ongoing coronavirus (‘COVID-19’) pandemic, though tenants in select categories have been unwilling or unable to pay during these challenging times. In particular, Realty Income’s movie theater tenants did not pay rent in June or the second quarter of 2020, according to the REIT. Realty Income’s ongoing access to debt markets combined with its ample borrowing capacity under its revolving credit facility has enabled the company to keep making good on its monthly dividends during the pandemic. Shares of O yield ~4.7% on a forward-looking basis as of this writing (at an annualized payout just south of $2.80 per share) after the firm pushed through its 107th monthly dividend increase in June 2020.

Jun 21, 2020

Why We Like Apple and Microsoft in the Newsletter Portfolios
Image Shown: Shares of Apple Inc (blue line) and Microsoft Corporation (red line) are up significantly year-to-date as of the market close on June 19, and we see room for both shares of AAPL and MSFT to continue marching higher after recently revising our fair value estimates for both companies. On June 12, we added back shares of Apple and Microsoft Corp to both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio. We added Apple and Microsoft back to the newsletter portfolios using the cash position generated by removing the Vanguard Real Estate ETF and the SPDR S&P Aerospace and Defense ETF from the Best Ideas Newsletter portfolio and Cracker Barrel and Bank of America Corp from the Dividend Growth Newsletter portfolio on June 11. The Best Ideas Newsletter portfolio (link here) and Dividend Growth Newsletter portfolio (link here), as of June 15, 2020, can be viewed on our website. There are a lot of reasons to like Apple and Microsoft, especially during these turbulent times. Both firms have massive net cash positions, better positioning the tech giants to ride out the storm created by the ongoing coronavirus (‘COVID-19’) pandemic. Both companies are free cash flow cows and their growth trajectories are underpinned by secular growth tailwinds (particularly on the cloud computing and digitally-provided services side of things), further bolstering their cash flow profiles.

Jun 21, 2020

Gap Buys Itself Some Time
Image Shown: An overview of Gap Inc’s net sales by brand. Image Source: Gap Inc – First Quarter Fiscal 2020 IR Earnings Presentation. On June 4, Gap reported first quarter fiscal 2020 earnings (period ended May 2, 2020) that missed both consensus top- and bottom-line estimates. Shares of GPS have gotten crushed due to the ongoing coronavirus (‘COVID-19’) pandemic as consumers (particularly those in the US) have spent far less on discretionary goods (like apparel) over the past several months. Combined with the negative impact of physical store closures and the lack of a meaningful online presence, Gap shares sank as its outlook turned dire. Though Gap operates stores in over 40 countries, please note about ~80-82% of its GAAP net sales came from the US from fiscal 2017 to fiscal 2019, highlighting its dependence on the US consumer.

Jun 11, 2020

*ALERT* Newsletter Portfolio Changes
Image: The markets are selling off rather aggressively today, June 11, but it is important to keep things in context. Above, the NASDAQ 100 Index just hit all-time highs recently, and some profit taking is to be expected. Though it will make for scary headlines, the move today isn't out of the ordinary after such a strong run higher. We're making a couple tweaks to the simulated newsletter portfolios today. It has been one of the strongest bull markets we've ever seen off the March 23 bottom, and while we continue to be optimistic about some of our favorite ideas, we are now re-positioning the newsletter portfolios after taking advantage of the surge.

May 28, 2020

CubeSmart’s Financial Flexibility Will Come In Handy
Image Source: CubeSmart – March 2020 Investor Presentation. On May 7, High Yield Dividend Newsletter portfolio holding CubeSmart--5.0% yield--reported first-quarter 2020 earnings. The company pulled its full-year guidance for 2020 given the uncertainties caused by the ongoing coronavirus (‘COVID-19’) pandemic. We appreciate that the self-storage real estate investment trust (‘REIT’) remained comfortably free cash flow positive last quarter, which is one of the reasons why we like CubeSmart as a high yielding play in the REIT world.