Exclusive Analysis for the Discerning Investor
The long-term outlook for Apple is debated in light of the Samsung Galaxy Note 7 debacle. What does the future hold? Let’s get the thoughts of the Valuentum analyst team. Companies mentioned: AAPL, GOOG, GOOGL, SSNLF, BBRY
Key Takeaways AT&T has agreed to acquire Time Warner for $85.4 billion in cash and stock in a deal that is expected to close by the end of 2017. Strict regulatory scrutiny can be expected. The deal has the potential to disrupt the traditional pay-TV industry while setting AT&T apart from its competitors in the wireless telecom industry, where growth has become sparse for the firm. The telecom industry is maturing, and price-slashing competition has changed the game as network differentiation has largely become a thing of the past. We’re not fans of the debt that will come with the completion of the deal, but the prospects of what the combined entities could produce are certainly interesting. We view the … Read more
Companies mentioned: INTC, GOOG, GOOGL, AMD, QCOM, AAPL
Key Takeaways Netflix unit subscriber growth is not accelerating, having flattened through the first nine months of 2016 (12 million net additions). The current market capitalization of Netflix implies the company must grow consolidated operating earnings by 8-fold to be considered fairly valued. The content cost thesis is a well-traveled one, but the market is missing the vast overhead expenses (marketing, G&A) related to Netflix’s business, which punish earnings and are excluded from segment profit calculations often used in buy side valuations. Netflix’s sources of upside: pricing leverage, contribution margin improvement, a potential buyout, and new ancillary business lines: advertising, licensing, consumer products, etc. We continue to believe shares of Netflix are vastly overpriced, with a beta-driven sell-off the catalyst … Read more
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Image Source: Lr43_L1000009 By Kris Rosemann Samsung’s (SSNLF) issues with its Galaxy Note 7 smartphone began in late August when the firm postponed shipments of the smartphone due to product quality testing. The event was not a major issue, as early demand for the device had outpaced supply, already causing shipment delays to some markets. Shortly after the delay was announced, claims of the smartphones’ batteries exploding surfaced, and Samsung subsequently announced it would recall Galaxy Note 7s across the globe. The recall announcement only began the saga of despair for the Galaxy Note 7 series. One week later, the FAA issued a warning that the devices could be an airborne fire hazard and suggested consumers refrain from using the smartphones … Read more
By Kris Rosemann and Brian Nelson, CFA At Valuentum, we like slam-dunk, no-brainer investment opportunities–like Microsoft (MSFT) in the mid-$20s before it doubled, or Visa (V) prior to its strong equity price performance in recent years, or even cigarette-maker Altria (MO) in advance of its ongoing march higher since the dawn of the release of the inaugural Best Ideas Newsletter. Our members count on us to use our knowledge of valuation to sort out “investable” stocks from “uninvestable” ones; good stocks with fundamental promise from bad ones built on fantasy outcomes. Benjamin Graham calls what we do “investing,” while he may call readers that dabble in the two highlighted stocks in this piece “speculators.” There is a difference, and it’s … Read more
By Kris Rosemann Late September brought two announcements from Apple (AAPL) that should bode well for demand for its mobile devices and wearable technology and add to the reach of its ecosystem of apps. On September 28, the firm announced a partnership with consulting firm Deloitte & Touche to form a service called ‘EnterpriseNext’ in which Deloitte is creating a service with over 5,000 strategic advisors focused on helping businesses maximize the effectiveness of their use of iOS with iPhones and iPads. Deloitte CEO Punit Renjen pointed to his company’s use of Apple products, and 75 custom apps, as a core driver behind the deal. Deloitte will not only offer consulting services across more than 20 industries but will also … Read more
We talked about how the Best Ideas Newsletter portfolio has outdistanced a flat market since May 2015, the last time that the market was at present levels, but…it gets better. “In the five year period ended August 31, 2016, only 9.5% of actively managed large-cap domestic equity funds beat the S&P 500. Meanwhile, the Best Ideas Newsletter portfolio has generated nearly 33 points of outperformance since its inception in May 2011.” — Kris Rosemann ————— By Kris Rosemann At Valuentum, we have highlighted the potential for investors to beat the market, often chiding index-funds that are content to take individuals’ capital and collect a fee on assets that they are adding little value to. However, it appears that active money … Read more
By Kris Rosemann The Competition Commission of the European Union has ordered Apple (AAPL) to pay up to ~$14.5 billion in back taxes plus interest to the government of Ireland after concluding that the country unjustly allowed the firm to pay an effective corporate tax rate between 0.005% in 2014 and 1% in 2003 on its European profits. The total amount deemed owed by the EU is 40 times the largest amount previously demanded in such a case. While $14.5 billion is certainly a meaningful sum of cash, if there is a company equipped to handle such a situation, it is Apple. As of the end of the third quarter of its fiscal 2016, it had ~$231.5 billion in cash, … Read more