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Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

5 Minutes with Valuentum’s Brian Nelson

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Valuentum: Brian, thanks for joining us today. Nelson: It’s my pleasure. Valuentum: So the markets continue to make all-time highs. What are you telling investors? Nelson: That depends. If you’re going to be in the market for more than 10 years, then you don’t have much to worry about. For long-term investors that are decades away from retirement and have absolutely no liquidity or income needs from their investments, one particular event resonates in my mind as to why they should have a full risk allocation to stocks. That event is the stock-market recovery from the Financial Crisis of 2008-2009 — which is the worst financial event of our generation. In just 5 or so years after the credit crunch, … Read more

Assessing Materiality of 5 Relatively Poor Incremental Data Points from eBay

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eBay (EBAY) has one of the strongest business models on the market today. The firm uniquely benefits from a network effect in its auction business and a secular trend toward consumer online consumption in its payments business, PayPal. Recent same-store sales performance has also been solid, albeit slowing, in recent periods. According to ChannelAdvisor same-store sales growth at eBay came in at 11.5% in May, down from 14% in April. eBay retains a vibrant Economic Castle. Before we start walking through the five relatively poor incremental data points from eBay, we need to make a couple things clear. First, we hold eBay in the portfolio of our Best Ideas Newsletter, and we do not expect to make any changes to … Read more

More Excitement from Apple

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Apple’s (AAPL) Worldwide Developers Conference (WWDC) is just around the corner (June 2-6), and we would expect the iPhone-maker’s equity to face some volatility during the conference and as it heads into the expected 7-for-1 stock split, which will go into effect June 9. Given all the moving parts in the next couple weeks, we plan to release an updated 16-page report on Apple the week after the split, or the week of June 16, so please be sure to stay active on our website for the update. On a split-adjusted basis, members should expect our valuation of the iPhone maker to come in at just over $100-$105 each (roughly in-line with its current $715 per share estimate, unadjusted for … Read more

Valuentum Interim Newsletter Update

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Summary Best Ideas, Dividend Growth Portfolio Holding Apple Crosses Above $600! Best Ideas, Dividend Growth Portfolio Holding Altria Keeps Marching Higher! Removing DirecTV from Best Ideas Portfolio  June Edition of Dividend Growth Newsletter to Be Released June 1 Dear Member, We’d like to share a few updates today. First of all, we are very pleased with Apple’s (AAPL) recent stock-price performance. As you know, Apple is the largest weighting in the Best Ideas portfolio and one of the largest positions in the Dividend Growth portfolio. We’re very excited about the acceleration of the company’s iPhone 6 launch, and we think the firm is worth north of $700 on the basis of our discounted cash-flow analysis. View its landing page here. … Read more

ALERT: Apple Pulls Forward iPhone 6 Launch!

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On the same day Apple (AAPL) announced the purchase of Beats Electronics for $3.2 billion, Reuters reported that a Taiwanese media source stated that Apple will release the next iteration of the iPhone in August, one month earlier than expectations. The $3.2 billion purchase price of headphone maker and music-streaming service Beats is economically-neutral from our standpoint, and in the context of its massive share repurchase program and the firm’s $500 billion market capitalization, the net impact of the transaction is effectively immaterial. In any case, the deal will bolster Apple’s music offering in the face of growing competition from Pandora (P), Spotify, Rhapsody, and Google’s (GOOG) YouTube, and give it a platform to drive a streaming and subscription-based business … Read more

Pounding the Table on Apple’s Shares…Again

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Apple (AAPL) is a top weighting in both the Best Ideas portfolio and Dividend Growth portfolio. Need we say more? The company announced today that it is making preparations for a hefty bond sale to fund its stock repurchase program, a move that is driving the company’s shares to ‘break out’ (more info). The company looks poised for rapid price-to-fair value convergence. We think Apple is worth more than $700 per share on a split-unadjusted basis (more than $100 per share after the impending 7-for-1 split). The firm’s 16-page report and dividend report have now been updated to reflect its improving technical/momentum considerations and recent dividend increase. Shown below is how the Valuentum Buying Index helped us time our entry … Read more

Dividend Increases for the Week Ending April 25

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Below we provide a list of firms that raised their dividends during the week ending April 11. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week 1st Source Corp (SRCE): now $0.18 per share quarterly dividend, was $0.17. Altra Holdings (AIMC): now $0.12 per share quarterly dividend, was $0.10. Apple (AAPL): now $3.29 per share quarterly dividend, was $3.05. Aspen Insurance Holdings (AHL): now $0.20 per share quarterly dividend, was $0.18. Avery Dennison (AVY): now $0.35 per share quarterly dividend, was $0.29. BCB Bancorp (BCBP): now $0.14 per share quarterly dividend, was … Read more

Apple Is Back!

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Apple (AAPL) is back, and we think this means all the difference in the world when it comes to driving price-to-fair value convergence. On Wednesday, the firm put up excellent fiscal second-quarter results. As the quarterly headline suggests, strong iPhone sales in emerging markets (thanks in part to China Mobile) drove record March quarter revenue and 15% earnings-per-share expansion. The $11.62 per share quarterly earnings number exceeded the consensus estimate by more than 14%, so it was a large beat. During the period, the company generated $13.5 billion in cash flow from operations and returned almost $21 billion in cash to shareholders through dividends and share repurchases. Apple also guided revenue in the fiscal third quarter to the range of … Read more

Focus on a Rules-Based Process Not on Short-term Outcomes

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By Brian Nelson, CFA …you should be skeptical of what investment advice you use and who your sources are. (Investment gurus) give…seemingly solid advice in (their) columns, but (as) it turns out (their) stock picking skills don’t translate so well into the mutual fund industry… …Part of the problem is that you have no idea what they’re actual track record is or the conviction they hold on each recommendation they put out there. The talking heads have no idea what your risk profile and time horizon are. There’s a huge disconnect between financial predictions you read about or see on TV and your personal circumstances. That’s why it’s so important to focus on a rules-based process instead of short-term outcomes. It … Read more