Valuentum Exclusive Analysis for the Discerning Investor

Symbol Keyword

Oct 23, 2024

Tesla’s Margins, Free Cash Flow Swell in Third Quarter
Image: Tesla has returned to a free cash flow rich entity. Tesla reported solid third quarter results that showed a business that is getting back on track. Not only did production and deliveries increase nicely on a year-over-year basis, but the firm’s margin improvement is a sight to see and comes in the wake of lowered vehicle selling prices. Tesla also showcased its cash generation capacity in the quarter, with free cash flow more than tripling. We like Tesla’s net-cash-rich balance sheet, its free cash flow generation, and its ability to drive growth, but we fall short of including shares in any newsletter portfolio.

Apr 19, 2024

Dividend Increases/Decreases for the Week of April 19
Let's take a look at firms raising/lowering their dividends this week.

Feb 16, 2024

Dividend Increases/Decreases for the Week of February 16
Let's take a look at firms raising/lowering their dividends this week.

Nov 2, 2023

Ferrari's Results Speak to Resilience in Ultra-Luxury Markets
Image: Ferrari raised its guidance for 2023. Ferrari raised its year-end guidance thanks in part to a strong product mix and improved revenue from racing activities, and the firm noted that its “order book remains at highest levels reflecting strong demand across all geographies, covering the entire 2025.” We couldn’t be happier with the performance at Ferrari, and the momentum speaks to continued strength across the ultra-luxury landscape. We like Ferrari as one of our favorite automakers, a name that we prefer much more than any of the Big 3 in Detroit.

Sep 20, 2023

Fed Rate Decision, UAW Strike Continues, Microsoft Ups Payout
Image Source: Mike Mozart. If you’re thinking like us about the ongoing Fed rate-hiking cycle, you’re probably thinking that perhaps we’ll see another rate hike or two down the road, even if the Fed pauses at today’s September 20 meeting. However, whether the Fed pauses from here on out or executes a couple more hikes, it really shouldn’t matter much to long-term investors. From where we stand, the conversation about interest rates should now be shifting away from worries about elevated inflation to the future positive prospects that correspond to the work that the Fed has already done. With the market-cap weighted S&P 500 just a stone’s throw away from all-time highs, despite aggressive contractionary monetary policy, we believe the market may start to view the existing levels of “high” near-term interest rates as dry powder for the Fed to stimulate the economy in the future, if or when it’s needed. The Fed has now built up a very nice insurance policy with little damage done to the U.S. stock market, and we think equities, particularly the stylistic area of large cap growth, may continue to reward investors as such a positive view is eventually factored in. New highs may once again be in the cards, and we remain bullish on the equity markets today, despite the ominous volatility experienced the past 20+ months.

Jul 24, 2023

Tesla Is A Net-Cash-Rich, Free-Cash-Flow Generating, Secular-Growth Powerhouse
Image: Tesla’s Cybertruck showcasing its versatility. The truck is on track to begin production at Gigafactory in Texas in the coming months. Image Source: Tesla's second-quarter press release. The cash-based sources of intrinsic value (and the trajectory of growth in them) are the most important considerations when it comes to assessing the attractiveness of an equity. Two of the most important cash-based sources of intrinsic value are net cash on the balance sheet and future expected free cash flows, and in these two areas, Tesla excels. Though we won’t be adding Tesla to any of the newsletter portfolios anytime soon, we like it within a diversified basket of large-cap growth equities, of which the Best Ideas Newsletter in some ways approximates.

Jul 4, 2023

Tesla Registers Record Total Deliveries in Second Quarter 2023
Source: Tesla. We’ve liked Tesla’s share-price strength so far this year, and record total deliveries during the second quarter of 2023 help to continue to support its impressive share-price move. The high end of our fair value estimate range of Tesla stands at $335 per share, meaning shares of Tesla still have more room to run. The company remains one of the most speculative ways to play U.S. equities.

Apr 21, 2023

Dividend Increases/Decreases for the Week of April 21
Let's take a look at firms raising/lowering their dividends this week.

Jun 30, 2022

Big Changes in the Auto Industry as Chip Shortages, Supply Chain Issues, and Rising Input Costs Complicate Matters; Tesla and Ferrari Our Two Favorite Names
Image: Ferrari’s fundamental momentum has been strong of late. Image Source: Ferrari N.V. 2022 Globe Newswire. The auto industry perhaps has changed more than any other industry the past five years. First, it was Ford that said it wouldn’t make passenger cars anymore, except for its iconic Mustang. Then, the European Union said that it would eventually end the internal combustion engine (ICE) by 2035. Then, Tesla reached over $1,200 per share and over a $1 trillion market capitalization. Can you imagine a world where Ford is not making sedans, the once modern-marvel of the internal combustion engine is dying, and where one car maker is worth as much as the next nine car makers combined? Certainly, a lot has changed in the auto industry during the past decade, and we haven’t dabbled much in the auto sector as it relates to idea generation due in part to the industry’s fast-changing backdrop. That doesn’t mean that we’re not fans of the auto space and its promising long-term opportunities, particularly with electric vehicles (EVs). It just means that we think there are better stories elsewhere, as in ideas in the simulated newsletter portfolios. However, if we had to pick two of our favorite auto names to consider, they would be Tesla and Ferrari, even as we note General Motors and Ford both trade at mid-single-digit earnings multiples. That said, investors don’t necessarily have to take on the risks of automakers, especially as the group deals with chip shortages, supply chain issues, and margin pressures from higher input costs. The cyclicality of many of the operators and the reality that operating leverage cuts both ways (and is quite painful during difficult economic times) are risks that perhaps won’t ever go away. That said, exposure to the auto space via Tesla or Ferrari could work nicely in a broadly diversified equity portfolio should risk-seeking investors be so inclined. These two names remain on our radar.