Valuentum Exclusive Analysis for the Discerning Investor

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Nov 1, 2022

Newmont Reports Challenging 3Q, But the Stock Is a Key Diversifier in the Dividend Growth Newsletter Portfolio
Image Source: Newmont Mining. Newmont’s performance in the third quarter of 2022 is not what we would be looking for in one of our best ideas. We prefer strong free cash flow generators and those with hefty net cash positions, but as one of the rare ideas in the metals and mining arena in the Dividend Growth Newsletter portfolio, we’re not rushing to remove it. Newmont boasts a solid investment-grade credit rating, and while the near term has been tough for shares, it offers a unique dividend policy that embraces a base annualized dividend of $1.00 per share, payable at $1,200/oz gold price, with an incremental dividend payment targeting 40%-60% of incremental attributable free cash flow above the base gold price assumption. Newmont’s free cash flow generation and dividend payment are heavily tied to the price of gold, and while costs have increased at the mining giant in this inflationary environment, the company remains one of the best dividend plays to gain exposure to potentially rising gold prices in an inflationary environment, in our view. We continue to like its diversification benefits in the simulated Dividend Growth Newsletter portfolio.

Oct 28, 2022

In the News: META, AAPL, AMZN, RSG, DLR, VRTX, XOM, CVX
Image Source: Valuentum. Readers should expect a substantial reduction in our fair value estimate of Meta Platforms on the basis of materially reduced forecasts of free cash flow. Apple’s calendar third-quarter results were good, considering that many were worried about iPhone 14 demand heading into the report. Amazon’s results support a cautious tone with respect to consumer spending, while we remain bullish on three of our best-performing ideas so far in 2022 – Vertex Pharma, Exxon Mobil, and Chevron. We didn’t see anything in the Republic Services and Digital Realty reports that would warrant any material changes to our theses at this time.

Oct 27, 2022

VBI Ratings Not as Impressive As We Would Have Liked in 2022
Image: How the VBI rating system has ranked equities so far this year. At Valuentum, we use the Valuentum Buying Index (VBI) to source ideas into diversified simulated newsletter portfolios, and the VBI may be most applicable to the simulated Best Ideas Newsletter portfolio, where we generally like to include ideas when they register a high VBI rating and remove them when they register a low VBI rating. We always use the VBI in a portfolio setting and never by itself. Let's talk more about the VBI rating system in this work.

Oct 27, 2022

McDonald’s, Chipotle’s Third-Quarter Results Were Solid, Strong Comp Performance
Image Source: Valuentum. We’re huge fans of McDonald’s positioning in the current inflationary environment, and we love Chipotle’s long-term unit growth potential. Global comparable store sales at McDonald’s were up 9.5% during the third quarter, while Chipotle expects to add 255-285 new restaurants in 2023, a pace we think is achievable given the momentum behind the brand and the adoption of Chipotlane’s that were kickstarted by COVID-19 protocols. The high end of our fair value estimate range for McDonald’s is $300 per share, while that mark stands at $1,765 per share for Chipotle. We like both firms as ideas in the simulated Best Ideas Newsletter portfolio.

Oct 26, 2022

Microsoft, Alphabet Calendar 3Q Reports As Expected; Pressured By Weakening Economy
Image Source: Abi Begum. We continue to be huge fans of large cap growth and big cap tech equities over the long haul, as their equity prices will likely slingshot back on the other side of the current economic malaise. Microsoft and Alphabet continue to generate gobs of free cash flow and their balance sheets are absolutely remarkable, boasting huge levels of net cash. We continue to like Microsoft and Alphabet in the simulated newsletter portfolios. Please note that Meta Platforms was removed from the simulated Best Ideas Newsletter portfolio on October 18.

Oct 24, 2022

Chip Stocks -- Geopolitical Uncertainty Heightens in China; ASML, QCOM Still Strong Long-Term Considerations, But Expect Near-Term Fundamental Weakness
Image Source: The U.S. Department of Commerce. The global economic environment continues to reel from heightened inflation, which is pressuring consumer discretionary spending, but geopolitical uncertainty remains at a fever pitch. Russia’s invasion of Ukraine has unsettled investors, but the back-and-forth between the U.S. and China has chipmakers in the crosshairs. On October 7, 2022, the U.S. Department of Commerce released a report aimed to restrict China’s ability to attain advanced computer chip technology. We expect a downward revision to our fair value estimates across the chip space, but many of their refreshed fair value estimates will remain within their existing fair value estimate ranges. We expect a downward revision to our fair value estimates across the chip space, but many of their refreshed fair value estimates will remain within their existing fair value estimate ranges. Qualcomm will report fourth-quarter results November 2, 2022, and we’ll have more to say after the report. We recently dove into ASML’s quarterly report for the period ending October 3, which wasn’t too bad. Of note, ASML indicated that the export restrictions won’t be as punitive for them as many believe given its headquarters in the Netherlands. Though our newsletter portfolio "exposure" to the chip space is small, we'll be watching fundamental performance across the group closely.

Oct 21, 2022

Get Excited: Dividend Growth Investors Rejoice! – More “Outperformance”
Image: Valuentum’s simulated Dividend Growth Newsletter portfolio continues to “outperform” relative to almost any dividend-paying benchmark this year! Past performance is not a guarantee of future results. This is not a real money portfolio. As of the last tally through October 19, the simulated Dividend Growth Newsletter portfolio is beating the S&P 500 Dividend ETF SPDR (SDY) by roughly ~3.2 percentage points so far in 2022 (-8.4% versus -11.6%), all the while we’ve seen some awesome dividend growth across the board, with Microsoft (MSFT), Lockheed Martin (LMT), Honeywell (HON), and Realty Income (O) recently pushing through some nice dividend increases. What’s ~3.2 percentage points on a million-dollar portfolio? ~$32,000 in capital one doesn’t have to make up when the market’s coming roaring back in the coming years – and that’s relative to a dividend growth benchmark that is “outperforming” the SPY in a big way in 2022.

Oct 20, 2022

Announcing Valuentum’s Customer Appreciation Day Winners!
Let's see who won an autographed copy of Value Trap and what they said about Valuentum's research! We applaud all of our members in their quest to preserve and generate long-term wealth. Keep going strong!

Oct 20, 2022

Philip Morris Is One of Our Favorite High-Yielding Income Generation Ideas
Image Shown: Philip Morris International Inc expects alternative nicotine products will grow at a robust pace over the coming years, with an eye towards heated tobacco units and oral nicotine products. By capitalizing on those opportunities, the company aims to diversify its revenues away from traditional cigarette sales. Image Source: Philip Morris International Inc – 2021 Investor Day Event Presentation. Philip Morris is a strong cash flow generator with ample pricing power and a bright growth outlook. Underlying demand for its IQOS heated tobacco offerings remains robust and demand for its traditional cigarette offerings is holding up well, even in the face of substantial inflationary pressures weighing negatively on consumer spending power around the global. Philip Morris’ near term guidance indicates that it should remain a strong free cash flow generator in 2022, allowing the firm to stay on top of its payout obligations. Management remains committed to rewarding income seeking shareholders, and we continue to like exposure to shares of Philip Morris in our High Yield Dividend Newsletter portfolio.

Oct 20, 2022

PepsiCo May Be A Rare Winner in This Inflationary Environment
Image Source: PepsiCo Inc – Third Quarter of Fiscal 2022 Earnings Press Release. PepsiCo is leaning heavily on net pricing increases to offset cost input and foreign currency headwinds, and its strategy is paying off. The consumer staples giant remains a nice free cash flow generator and management is incredibly shareholder friendly, though in our view, we think it would be wise for PepsiCo to pare down its net debt load. We recently added PepsiCo to the simulated Best Ideas Newsletter portfolio on October 18, 2022.