ALB

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

by

“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

Albemarle and ASML Holding Remain Key ESG-Focused Ideas

by

By Brian Nelson, CFA The investment landscape is fast changing, and investors want to invest how they want to invest. Custom approaches to meeting client needs have never been in greater demand. After all, the saying “there’s an ETF for that” has become as common as the saying “don’t put all your eggs in one basket.” There may be no greater or better investment than becoming more exposed to the sustainable trend of Environmental, Social and Governance [‘ESG’] investing, where ESG research points to key risks of a company that could have tremendous implications on its intrinsic value or fair value estimate distribution. For example, how should investors think about Johnson & Johnson’s (JNJ) talc exposure liabilities? What about 3M’s … Read more

Report Updates: Amazon Registers the Lowest Rating on Our Scale

by

Select the company’s link below to access their stock webpage where their 16-page stock report (pdf) can be downloaded. The stock webpage also houses the company’s dividend report (pdf), where applicable, as well as the latest company/industry commentary and news.    Albemarle (ALB) Amazon.com (AMZN) Applied Materials (AMAT) Cisco (CSCO) Halliburton (HAL) Lam Research (LRCX) Phillips 66 (PSX) Visa (V) CVS Health (CVS) Intuitive Surgical (ISRG) AbbVie (ABBV) Bristol-Myers Squibb (BMY) Gilead Sciences (GILD) Pfizer (PFE) Abbott (ABT) Oracle (ORCL) Archer-Daniels-Midland (ADM) Fresh Del Monte (FDP) Kraft Heinz (KHC) Lancaster Colony (LANC) McCormick (MKC) Molson Coors (TAP) Smucker (SJM) Sysco (SYY) ———- It’s Here!  The Second Edition of Value Trap! Order today!   —– Brian Nelson owns shares in SPY, SCHG, QQQ, … Read more

ICYMI: Questions for Valuentum’s Brian Nelson

by

Valuentum’s President Brian Nelson, CFA, answers your questions. Q: What Is Valuentum? A: In short, it is a strategy that combines the concepts of value and momentum within individual stocks. We measure value through the cash-based sources of intrinsic value – net cash on the balance sheet and future expected free cash flow. We measure momentum rather simply, generally via relative strength or other technical and momentum indicators. We like stocks with strong net cash positions on the balance sheet, ones that are generating tremendous free cash flow, and have strong secular growth prospects such that the prospect for expectations of free cash flow can continue to be ratcheted higher. Today, most Valuentum stocks are included in the stylistic area … Read more

Albemarle Is One of the Best Growth Stories on the Market Today

by

Image: Albemarle is a low-cost producer of lithium derivatives, an end market that is expected to experience tremendous demand in the coming years. By Brian Nelson, CFA On August 2, Albemarle Corp. (ALB) reported excellent second-quarter 2023 results that showed net sales advancing 60% and adjusted diluted earnings per share more than doubling in the quarter. For the full-year 2023, net sales are now expected to be between $10.4-$11.5 billion (was $9.8-$11.5 billion) thanks in part to continued strength in electric vehicle (EV) demand. Our fair value estimate for Albemarle stands at $257 per share, well above where shares are currently trading. We think the market is underestimating not only its growth potential but also mid-cycle levels of profitability. Albemarle … Read more

Latest Report Updates Concentrated in Mining & Chemicals and Healthcare Industries

by

———- In our 16-page equity research reports, we offer a fair value estimate for each company based on a rigorous and transparent discounted cash flow process, assess the attractiveness of a stock based on a firm-specific margin of safety, and provide a relative valuation comparison in the context of the company’s industry and peers. Each report includes detailed pro forma financial statements, explicit fundamental forecasts, and scenario analysis. A cross section of the ValueCreation and ValueRisk ratings provides a financial assessment of a company’s business quality (competitive position), while the ValueTrend and Economic Castle ratings offer insight into the trajectory of a firm’s economic profit creation (ROIC versus WACC). Included in each 16-page report is a company’s rating on the Valuentum Buying Index (VBI), a methodology that combines rigorous financial and valuation analysis … Read more

Our Reports on Stocks in the Mining & Chemicals Industry

by

Dividend Yield: Estimated on a forward-looking annualized basis. VBI: The Valuentum Buying Index, a timeliness indicator that overlays a price-to-fair-value estimate consideration. Fair Value Estimate: Derived by Valuentum’s enterprise valuation process. Dividend Cushion ratio: A ratio assessing the health of the dividend (the higher, the better). Data as of the date of this article. Individual company reports may have been updated subsequent to the publishing of this article, so please download a company’s stock and dividend report for its latest information and data. Note: The data in the tables of each of the below companies’ respective stock pages is updated the weekend after the publishing of this update. Please click on a company name below to view the corresponding equity … Read more

Albemarle Is Looking to Buy Australian Lithium Start Up

by

Image: Albemarle’s shares have faced pressure as lithium prices are expected to moderate in the near term. We continue to like Albemarle’s long-term story, however. By Brian Nelson, CFA On March 27, it became public that lithium maker Albemarle (ALB) is looking to bolster its future opportunities on the acquisition front, seeking to scoop up a smaller Australian lithium start-up Liontown Resources (LINRF). Though Liontown rejected the offer, other lithium stocks, including Standard Lithium (SLI), Sigma Lithium (SGML), Piedmont Lithium (PLL) and Lithium Americas (LAC) soared on the news. According to the firm’s website, Liontown’s project in Western Australia in Kathleen Valley is expected to be one of the world’s largest lithium mines, “supplying ~500,000 tonnes of 6% lithium oxide … Read more

How the Payment of a Dividend Impacts Intrinsic Value Estimation

by

  “Dividends are a transfer of cash to the shareholders that the shareholders already owned.” By Brian Nelson, CFA Many investors use the strategy of dividend growth investing as a means to generate increasing income in their retirement portfolios to stay ahead of inflation, or as a means to grow an income stream in the decades before retirement. Though we think such a strategy has tremendous merit, we think it’s important for readers to understand the mechanics of how a cash dividend payment impacts the valuation (intrinsic worth) of a company. How the Payment of a Dividend Impacts Valuation (Intrinsic Worth) In this article, let’s walk through the valuation adjustments we perform when a company pays a dividend to hammer … Read more

Albemarle Outlines Strong Lithium Demand Outlook

by

  Image Source: Albemarle By Brian Nelson, CFA Albemarle Corporation (ALB) released preliminary fourth-quarter numbers for revenue and earnings on January 23 that came in better than the consensus estimate. Net sales in the quarter are expected in the range of $2.59-$2.65 billion, up 190% to 196%, while adjusted diluted earnings per share is targeted in the range of $8.35-$8.75, up 727% to 766%. We’ll get final results for the fourth quarter on February 15, but clearly Albemarle is doing a lot of things right to put up such fantastic growth rates. For those just getting familiar with key ideas in the simulated ESG Newsletter portfolio, here is some background on Albemarle’s operations from its most recent Form 10-K; note … Read more