Valuentum Exclusive Analysis for the Discerning Investor

Symbol Keyword

Feb 14, 2021

Earnings Roundup: DIS, GM, PEP, TWTR, UA
Image Shown: A look at the 2022 GM HUMMER EV pickup truck that is due to launch by the end of this year. Image Source: General Motors Company – Fourth Quarter of 2020 IR Earnings Presentation. Earnings season is roaring along, and we cover the reports of five more companies across different sectors in this article (Disney, General Motors, Pepsi, Twitter, and Under Armour). The coronavirus (‘COVID-19’) pandemic continues to loom large, though we are encouraged by reports from Moderna that its existing COVID-19 vaccine approved for emergency use is at least somewhat effective at treating variants of the virus according to initial clinical trials (a lot more work needs to be done on the subject). Global health authorities are working to put an end to the public health crisis, though COVID-19 virus variants have created additional obstacles on that front. However, we still expect the COVID-19 pandemic will be brought under control sooner than many expect as global vaccine distribution efforts become more widespread and efficient. A common theme across earnings reports is that (most) of the companies in this article view their outlooks favorably, though serious short-term headwinds remain in some instances. Video streaming services continue to be in high demand, major automakers are stepping up their EV investments, demand for consumer staples products remains healthy, the digital advertising market is resilient, and retailers are leaning heavily on their omni-channel selling capabilities to ride out the storm caused by the COVID-19 pandemic.

Feb 8, 2021

Stock Market Outlook for 2021
2020 was one from the history books and a year that will live on in infamy. That said, we are excited for the future as global health authorities are steadily putting an end to the public health crisis created by COVID-19, aided by the quick discovery of safe and viable vaccines. Tech, fintech, and payment processing firms were all big winners in 2020, and we expect that to continue being the case in 2021. Digital advertising, cloud-computing, and e-commerce activities are set to continue dominating their respective fields. Cybersecurity demand is moving higher and the constant threats posed by both governments (usually nations that are hostile to Western interests) and non-state actors highlights how crucial these services are. Retailers with omni-channel selling capabilities are well-positioned to ride the global economic recovery upwards. Green energy firms will continue to grow at a brisk pace in 2021, though the oil & gas industry appears ready for a comeback. The adoption of 5G wireless technologies and smartphones will create immense growth opportunities for smartphone makers, semiconductor players and telecommunications giants. Video streaming services have become ubiquitous over the past decade with room to continue growing as households “cut the cord” and instead opt for several video streaming packages. We’re not too big of fans of old industrial names given their capital-intensive nature relative to capital-light technology or fintech, but there are select names that have appeal. Cryptocurrencies have taken the market by storm as we turn the calendar into 2021, but the traditional banking system remains healthy enough to withstand another shock should it be on the horizon. Our fair value estimate of the S&P 500 remains $3,530-$3,920, but we may still be on a roller coaster ride for the year. Here’s to a great 2021!

Jan 29, 2021

Repub from March 5, 2018: The Tragedy of Quantitative Finance
-- Okay – it’s not 2038, but just imagine if this could happen…

Jan 29, 2021

More Earnings Reports: BA, CMCSA, MCD
Image Shown: Though the past year has been brutal for the commercial airliner and aerospace industries, and it will continue to be rough sledding in the near term, Boeing is optimistic that within a few years passenger traffic will return to pre-pandemic levels and resume its growth trajectory thereafter. Image Source: Boeing Company – Fourth Quarter of 2020 IR Earnings Presentation. We are continuing with our coverage of key earnings reports. Ongoing vaccine distribution activities should help global health authorities bring the coronavirus (‘COVID-19’) pandemic under control, though risks remain as new variants of the virus are popping up all over the place (and then spreading aggressively). In this article, we cover the recent earnings reports from Boeing, Comcast, and McDonald's.

Jan 27, 2021

ALERT: Raising Cash in the Newsletter Portfolios
Our research has been absolutely fantastic for a long time, but 2020 may have been our best year yet. With the S&P 500 trading within our fair value estimate range of 3,530-3,920 (and the markets rolling over while showing signs of abnormal behavior), we're raising the cash position in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to 10%-20%. For more conservative investors, the high end of this range may even be larger, especially considering the vast "gains" from the March 2020 bottom and the increased systemic risks arising from price-agnostic trading (read Value Trap). The individual holdings will be reduced in proportion to arrive at the new targeted cash weighting in the respective simulated newsletter portfolios. The High Yield Dividend Newsletter and Dividend Growth Newsletter are scheduled for release February 1. We'll have more to say soon.

Jan 22, 2021

We Expect Netflix to Turn Into a Free Cash Flow Generating Machine
Image Shown: Netflix Inc’s global paid subscriber base is expected to keep growing at a decent clip going forward, though at a slower pace than in the recent past. Image Source: Netflix Inc – Shareholder Letter covering its fourth quarter and full-year earnings in 2020. The video streaming services industry will continue to experience strong subscriber growth in 2021, and we see room for a number of winners in the space. Original content and scale are essential to remaining relevant, and competitive headwinds are growing as companies seek to replicate the success of Netflix. We think Netflix will eventually turn into a free-cash-flow generating machine, but at the moment, we're big fans of "new" streaming rival Disney and include the latter in the Best Ideas Newsletter portfolio. Disney is the top competitive threat to Netflix, in our view.

Jan 12, 2021

New Issue Airbnb's Shares Pricing In Strong Recovery and Then Some
Image Shown: Airbnb is losing money hand over fist while as it grows into its substantial market opportunity. Source: S-1.  Rental platform Airbnb has been a part of the latest series of IPOs that have soared out of the gates recently. Shares went public at $68 per share December 10, and now the equity is trading at more than $148 per share at the time of this writing. For those that don't know the story of Airbnb (AirBed & Breakfast), the concept started in 2007 when, after discovering that every hotel was sold out during an international design conference in San Francisco, the founders started renting airbeds in their apartment to conference attendees. Thirteen years have now passed, and Airbnb has over 4 million hosts that offer places to stay from private rooms, cabins, and farms to the most luxurious accommodations (even castles and private islands). Its hosts that range from schoolteachers to artists and beyond across ~100,000 cities have been wildly successful, raking in over $110 billion in income since Airbnb's inception while serving over 825 million guests. Much like Uber and Lyft have done with ridesharing and people in other's cars, Airbnb, to a very large extent, with all of its success to date, has provided a solution to make strangers feel comfortable staying in each other's homes.

Dec 12, 2020

Best Ideas Newsletter Portfolio Holding Disney Surges to All-Time Highs
Image Shown: The reach of the Disney+ video streaming service continues to grow as The Walt Disney Company keeps expanding the service into new markets. Image Source: The Walt Disney Company – December 2020 Investor Day Presentation. We continue to be big fans of The Walt Disney Company and include shares of DIS in the Best Ideas Newsletter portfolio. Back when Disney’s stock price plummeted this past March, we stuck with our capital appreciation thesis and did not panic. Since then, shares of DIS have staged an impressive comeback and are currently trading near all-time highs. Shares of Disney are up ~22% year-to-date as of this writing, significantly outperforming the S&P 500 (SPY) which is up ~14% during this period (before taking dividend considerations into account, which does not change this picture much). Our optimistic view towards Disney is underpinned by the company’s bright long-term growth outlook. Though it will take a few years for Disney’s video streaming business to become a profit generating machine, the market is clearly excited about how this segment could potentially drive Disney’s future free cash flows meaningful higher over the long haul. The high end of our updated fair value estimate range is $184 per share.

Nov 13, 2020

Shares of Disney are Now Surging Towards the Top End of Our Fair Value Estimate Range
Image Shown: Shares of The Walt Disney Company are steadily climbing towards the top end of our fair value estimate range, which sits at $153 per share of DIS. After the market closed on November 12, The Walt Disney Company reported its fourth quarter and full-year earnings for fiscal 2020 (period ended October 3, 2020). Its latest results beat both consensus top- and bottom-line estimates. Though Disney’s financials took a big hit from the coronavirus (‘COVID-19’) pandemic, as expected (with an eye towards the enormous headwinds facing its ‘Parks, Experiences and Products’ business segment), the company’s outlook has improved considerably as its various video streaming services continue to outperform. We include shares of Disney in our Best Ideas Newsletter portfolio with a modest weighting. As the top end of our fair value estimate range sits at $153 per share of Disney, there could be room for shares to run higher even after recent share price gains.

Nov 4, 2020

Best Ideas Newsletter Portfolio Holdings Are Surging!
Image: The holdings in the Best Ideas Newsletter during the trading session November 4. We continue to pound the table on our best ideas. If you were like me, you stayed up as long as you could last night watching the U.S. election coverage before it became too difficult to keep your eyes open. When I went to sleep, it seemed as though Donald Trump would be re-elected. The only state that appeared to flip to the Democrats from the 2016 election was Arizona, meaning Trump would still retain greater than the 270 electoral votes required to gain re-election. Well, that was last night, and this is today. As more and more votes came in last night and into the morning, it became evident that the races in Wisconsin and Michigan were much tighter than the news coverage last night led to believe. In fact, with just a small percentage of the votes left outstanding to count in those states, Joe Biden appears to be running ahead of Donald Trump in those states, if only ever so slightly (~20,000-30,000 votes). Donald Trump’s huge gap in Pennsylvania--about 8.7 percentage points at the time of this writing--may also narrow when it is all said and done. The bottom line is that this election is just too early to call!