AMZN

Trump Knocks Air Out of Amazon; Intel Investors Overreact to Apple News

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Only fools, or worse, are saying that our money losing Post Office makes money with Amazon. THEY LOSE A FORTUNE, and this will be changed. Also, our fully tax paying retailers are closing stores all over the country…not a level playing field! — Donald J. Trump (@realDonaldTrump) April 2, 2018 President Trump continues to move markets, and his messages about Amazon haven’t gone unnoticed. Apple seems to be targeting wider gross margins in coming years, as it looks to bring in-house a part of its supply chain. Intel’s shares overreact. By Brian Nelson, CFA President Trump seems to want to put Amazon (AMZN) in its place, and his recent comments have been a source of fear for many investors of … Read more

General Mills’ Dividend Is Now of Questionable Health

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General Mills is stuck between a rock and a hard place, and the market is finally noticing. Its best dividend growth years have been behind it, but its recent dealings have put it in a rather precarious position heading into the next recession, the timing of which is the only uncertainty. The company has never been a consideration for inclusion in the simulated Dividend Growth Newsletter portfolio. By Brian Nelson, CFA On March 21, consumer staple General Mills (GIS) reported better-than-expected fiscal third-quarter results that showed reported net sales advancing 2% and operating profit increasing 9%, both measures over the comparable period last year. Though the top and bottom-line numbers appeared to be solid (adjusted diluted earnings per share leapt … Read more

Market Overreacts to Oracle’s Cloud Outlook

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Image Shown: The performance of Oracle since the March 2009 bottom. By Brian Nelson, CFA On March 19, Oracle (ORCL) reported in-line fiscal third-quarter results that showed revenue advancing 6.1%, operating income increasing 15.2%, and net income before income taxes jumping 22.3%. The quarter was impacted by a large one-time impact from the U.S. 2017 Tax Cuts and Jobs Act, making year-over-year comparisons on an after-tax basis less meaningful. The company’s fiscal third-quarter non-GAAP earnings per share number of $0.83 translates to 20% growth, and thus far during the fiscal year, non-GAAP earnings-per-share has advanced 16%. Oracle continues to execute well on its growth initiatives. However, the market was looking for a bit more with its outlook, as shares were … Read more

Cigna, Express, and the Unwinding of the PBM Market

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Given its track record of creative destruction, when Amazon plans to enter a particular line of business, it presents an ominous threat to incumbents. What is often overlooked, too, is that Amazon is more than willing to try new verticals—if they prove promising, additional assets will be devoted to the new line of business, often with fawning media coverage. If Amazon is unsuccessful in its endeavor, however, then it seems as though it will “fail fast” and shut down the project and move on. We found the recent announcement of a joint venture to tackle the healthcare industry as particularly noteworthy. By Alexander J. Poulos Amazon as the Great Disrupter We have marveled at Amazon’s (AMZN) rumored ambition into pharmaceutical … Read more

The “Luck” and “Randomness” of Index Funds

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Please select the image below to download the document. Image shown, page 1 of 14. Tickerized for Valuentum’s coverage universe.

Toys ‘R’ Us Liquidation News Transient to Toy Makers

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Image Source: Hasbro Another icon from past decades announced that it may have to liquidate. Though we expect the toy makers to experience a transient impact, we don’t expect it to be lasting. Digital entertainment licensing remains a faster-growing, higher-margin business for them than physical toy sales, and we expect the focus for many toy makers going forward will be on the former, particularly given Disney’s Frozen success. By Brian Nelson, CFA There’s nothing like the announcement of a customer’s possible liquidation to send shares of suppliers tumbling. That’s what happened when Toys ‘R’ Us announced that it may have to cease operations as nobody appears to be coming to the rescue. Hasbro (HAS), Mattel (MAT), and JAKKS Pacific (JAKK) … Read more

The Future for Independent Advisors and Planners Is…Stock Selection? What?

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Image Source: 401K Calculator By Brian Nelson, CFA The world is fast-changing, and the financial markets are changing even faster. One of the most influential writers in the blogosphere, Josh Brown (aka the Reformed Broker) wrote one of the most thoughtful pieces I’ve read in a long time last October, “Just own the damn robots.” The gist of the piece is that technology is taking jobs everywhere, and employees that are being displaced may be investing in the same companies that are displacing them as a form of insurance (investing in their “own destruction,” so to speak). It was a fresh read and a fascinating viewpoint. As a former director in Morningstar’s equity and credit department that headed up training … Read more

Systemic Risk

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Image Source: Maximo Santana We believe the next crisis will not be a banking crisis, but one of a breakdown in market structure. By Kris Rosemann and Brian Nelson, CFA The volatility of US equity markets has simply been incredible of late. What a change of tune from the past 12-18 months. Many investors are growing more concerned about the health of US sovereign credit and implications on borrowing costs, the benchmark Treasury yield, and further, such implications on long-run equity values (rising interest rates in stock valuation models reduces intrinsic value, all else equal). Moody’s has been warning about the deteriorating health of the US as a result of tax reform, pointing to “at least a $1.5 trillion deficit … Read more

Rising Risk Free Rates Threatening Market, Removing CVS and Hanesbrands

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The most important variable to keep your eye on, the 10-year Treasury, is rising, and the long-term implications on equity values could be considerable. We don’t think the moves thus far have been too disruptive, but continued concerns over US tax receipts and infrastructure/defense spending could send sovereign yields roaring higher. As fourth-quarter earnings season marches on, let’s take a look at some meaningful recent quarterly reports. We’re also shedding two companies from the simulated newsletter portfolios. By Kris Rosemann and Brian Nelson, CFA The market continues to be on edge as it considers what the borrowing cost of US debt might be in the event of the next downturn, the timing the only uncertainty, now that it has significantly … Read more

Hasbro, Boeing Pop as Market Bounces Back

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Image Source: US Missile Defense Agency. June 22, 2014 – The Missile Defense Agency’s Flight Test 06b Ground-Based Interceptor launches from Vandenberg Air Force Base, Calif. on June 22, 2014. The markets have finally been getting the volatility that we’ve all been waiting for, and we don’t like the idea that the market is now trading more like a cryptocurrency. Granted, it’s important to stay focused over a long-term time horizon, which irons out the ups and downs, but there’s just something about 1,000+ daily swings on the Dow Jones Industrial Average that really doesn’t sit well with us, regardless of what that implies with respect to the percentage change. Can you imagine — All of this over just a … Read more