ALB

Paper: Value and Momentum Within Stocks, Too

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Please select the image below to download, “Value and Momentum Within Stocks, Too:” Abstract: This paper strives to advance the field of finance in four ways: 1) it extends the theory of the “The Arithmetic of Active Management” to the investor level; 2) it addresses certain data problems of factor-based methods, namely with respect to value and book-to-market ratios, while introducing price-to-fair-value ratios in a factor-based approach; 3) it may lay the foundation for academic literature regarding the Valuentum, the value-timing, and ultra-momentum factors; and 4) it walks through the potential relative outperformance that may be harvested at the intersection of relevant, unique and compensated factors within individual stocks. To download the full report, please click here (pdf). ———- Actual results … Read more

In the News: MO, META, QCOM, PSA, ALB

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By Brian Nelson, CFA Altria Group’s (MO) Performance to Be Weighted to the Second Half of the Year On July 31, Altria Group reported second-quarter results that came in lower than expectations. Revenue net of excise taxes declined 3% to $5.3 billion as the firm experienced lower net revenue in its smokeable product segment, which was not completely offset by higher net revenue in its oral tobacco products segment. Adjusted diluted earnings per share came in unchanged at $1.31, as lower other operating companies income was offset by a lower share count. The company narrowed its full-year 2024 earnings per share guidance to the range of $5.07-$5.15, representing an adjusted diluted earnings per share growth rate of 2.5%-4.0%. Altria Group … Read more

You Already Own Whatever Your Investment Will Pay You in Dividends

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“Business owners across the world know that their business is not more or less valuable because they paid themselves a higher distribution this quarter.” – Brian Nelson, CFA Image Source: Images Money Stocks are generally valued on the present value of all their future free cash flows, which already include future dividend payments. A company’s dividend policy may impact an investor’s eagerness to pay a higher price for shares on the basis of a higher yield, but the dividend is a symptom of future free cash flows (and therefore intrinsic value), not a driver behind it. where A (t) is an Enterprise Free Cash Flow (1) at year t,                 B (0) is a Total Debt at time 0,                 … Read more

We Remain Bullish; Is This 1995 – The Beginning of a Huge Stock Market Run?

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Image: Large cap growth stocks have trounced the performance of the S&P 500, REITs, and bonds since the beginning of 2023. We expect continued outperformance in this area of the market. By Brian Nelson, CFA We’re now roughly four years past the depths of the COVID-19 meltdown, where equities collapsed in February and March of 2020. As the markets began to recover through 2020, our long-term conviction in equities only grew stronger. We think the biggest risk for long-term investors remains staying out of the market on the basis of what could be considered stretched valuation multiples. As we outlined heavily in the book Value Trap, valuation multiples hardly tell the complete story about a company and often omit key … Read more

Lithium Prices Remain Volatile; Albemarle Adjusts Long-term Demand Forecast

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Image: Albemarle’s shares have faced significant pressure as a result of depressed lithium prices. By Brian Nelson, CFA The Financial Times reported February 16 that Albemarle (ALB) had reduced its 2030 demand forecast for lithium due to a reduced pace of electric-vehicle adoption in the U.S. and Europe. According to reports from Seeking Alpha, Albemarle now believes that 3.3 million tons of lithium carbon equivalent [LCE] will be in demand across the globe by the end of this decade, a pace that is meaningfully lower than the 3.7 million tons it had projected previously. Albemarle is also dealing with plunging lithium prices, which have punished its cash flow more recently. We think most of the bad news is priced into … Read more

3 Substantial Benefits of Dividend Growth Investing

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Dear members: There are three primary benefits of a well-executed dividend growth strategy, one that is carried out with prudence and care and one that pays careful attention to the intrinsic value of the stock and its critical cash-based components. Albert Einstein is reported to have called compound interest the “eighth wonder of the world,” but dividend growth investing has the potential to offer long-term investors so much more! Let’s explain. 1) Reinvested Dividends Compound Over Time Over the past decade, I have grown to appreciate the compounding dynamics of reinvested dividends on appreciating stocks even more than historical studies have revealed. The strategy of dividend growth investing not only benefits from the reinvestment of dividends into the purchase of … Read more

In the News: MSFT, AAPL, SAVE, ALB

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Image: Microsoft and Apple have been strong performers the past several years, with Microsoft recently surpassing Apple’s market capitalization to become the largest entity in the S&P 500. By Brian Nelson, CFA The start of trading in 2024 hasn’t been tracking the way that we like, but it’s way too early to sound the alarm on any sort of correction. The employment markets remain very healthy, both as it relates to unemployment and wage gains, while inflation looks to be largely under control, with the market expecting a number of rate cuts during 2024. We continue to like the areas of big cap tech and large cap growth in the current market environment. Microsoft (MSFT) is now the largest company … Read more

12 Reasons to Stay Aggressive in 2024

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By Brian Nelson, CFA 1. The Fed has signaled that rate cuts could start with inflation at a 2 handle (2 point something) and not at exactly 2.0%. That means that the Fed may become anticipatory to prevent overshooting to the downside with inflation. We see this as positive for long-duration equities, particularly those whose free cash flow generation is robust in the out-years, inclusive of big cap tech and the stylistic area of large cap growth. 2. Unemployment is at structural lows of 3.7%. Employers are working hard to keep talent on board, and with each paycheck, employees are pumping more and more money into the stock market via retirement accounts. This tailwind remains a stiff one and will … Read more

ICYMI — Video: Our Top Stocks for 2024

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Video: Valuentum’s President of Investment Research Brian Nelson walks through the success of Valuentum’s newsletter suite, the state of the economy and markets, and offers his favorite idea for each sector. Tune into this must-watch video. ———- It’s Here!  The Second Edition of Value Trap! Order today!   —– Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, BITO, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, RSP, SCHG, QQQ, and VOO. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.  Valuentum members have access to our 16-page stock … Read more

A Note on Valuation — Low P/E Stocks with High Dividend Yields

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“But carrying low valuation parameters is far from synonymous with “underpriced.” It’s easy to be seduced by the former, but a stock with a low p/e ratio, for example, is likely to be a bargain only if its current earnings and recent earnings growth are indicative of the future. Just pursuing low valuation metrics can lead you to so-called “value traps”: things that look cheap on the numbers but aren’t, because they have operating weaknesses or because the sales and earnings creating those valuations can’t be replicated in the future.” – Howard Marks, Something of Value (2021) By Brian Nelson, CFA I was reminded of Howard Marks’ 2021 memo, “Something of Value,” after a few readers expressed interest in low … Read more