AMZN

Amazon’s Free Cash Flow and Balance Sheet Health Impressive

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Amazon’s share-price performance is a sign of these “frothy” times. By Brian Nelson, CFA We love Amazon’s (AMZN) products and how it makes millions of people’s lives better each and every day. We hear what the “bulls” are saying, too–about top-line expansion and the company’s second quarter being a period of greater investment–but earnings and free cash flow matter. If not today or tomorrow or a few years from now, they will eventually. For Amazon, as strong as its free cash flow generation and net cash position on the books are, the combination doesn’t justify its current lofty valuation. The stock trades at over $1,000 per share at the time of publishing, and it’s almost laughable, by comparison, that we … Read more

Alphabet’s Financial Health Unfazed By European Commission Fine

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Image Source: Open Grid Scheduler Alphabet’s second-quarter results revealed a one-time charge that made headlines, but the fine is a drop in the bucket when considering the size of Google’s balance sheet and free cash flow generation. By Brian Nelson, CFA Shares of Alphabet (GOOG, GOOGL), the company formerly known as Google, sold off following the release of its second-quarter report July 24. We’re not making much of the market’s negative reaction to a quarter that revealed 23% year-over-year revenue growth (on a constant-currency basis) and earnings per share north of $5, both the top line and bottom line coming in above Street consensus expectations. Adjusting for the widely-publicized European Commission (EC) fine of $2.7 billion*, which Alphabet accrued in the … Read more

Walgreens Builds Out Its Network

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Image Source: Mike Mozart Walgreens continues its quest to build out its network of pharmacies. The goal is to maintain the largest network in the US, which would make exclusion from a payer’s network very difficult. Let’s review the recently-revised terms of the deal to acquire a portion of Rite Aid, the third-largest pharmacy chain in the US. By Alexander J. Poulos The Quest to Expand the Network Walgreens Boots Alliance (WBA), under the very capable leadership of Stefano Pessina, is attempting to transform into a global pharmacy-led health and wellbeing provider. The genesis of the idea was initiated with the combination of Boots Alliance, a predominately UK-based pharmacy chain with Walgreens. Upon the consummation of the deal in 2014, … Read more

Random Musings: Retail, REITs, BlackBerry, and More

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Image shown: Best Buy’s resiliency in the face of competition from Amazon. Let’s cover some recent news. By Brian Nelson, CFA The markets have been relatively flattish the past week or so, but that may not mean much. They could still be digesting some of the big gains thus far in 2017 before potentially staging their next move. At the close June 26, the SPDR S&P 500 Trust ETF (SPY), a proxy for the S&P 500 stood at $243.29. For some reason, I felt it important to make note of this level, as if it were an important one. Things have been very quiet for a long time now, and I get the feeling that an inflection point may be … Read more

Best Ideas, Dividend Growth Newsletter Alerts and More

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Image Shown: The stock price performance of Boeing. Let’s take a look at recent news from newsletter portfolio holdings. We’re also parting with a “trade” we never should have made in the first place, and we’re letting go of one of our favorite restaurants in light of deteriorating technicals. This and more… By Brian Nelson, CFA Aside from predicting the ongoing inflation of the current equity market bubble in the US so far in 2017, we also thought crude oil prices (USO) would continue their recovery. Unfortunately, this hasn’t exactly worked out, and US crude oil prices have now entered a “bear market,” now falling below $43 per barrel. Are we saying that we know where crude oil prices are … Read more

Amazon To Buy Whole Foods: Not Creative Destruction, Just Destruction

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Image Source: Mike Mozart Amazon announced plans to buy Whole Foods. We’re viewing the news as affirmation of our decision to stay largely away from retail exposure in the newsletter portfolios. We think a bidding war for Whole Foods is possible, mostly to keep it and its real estate out of the hands of Amazon, potentially setting up for a true “winner’s curse” scenario. The winner will overpay. By Brian Nelson, CFA We’re not pleased, but then again, it’s okay. Amazon (AMZN) announced June 16 that it will buy high-end grocer Whole Foods (WFM) for $42 per share in cash. Though we mentioned that Amazon was expanding into the grocery store market anecdotally, we must say that it still is … Read more

Opinion: Is Amazon Prepared to Tackle the Pharmacy Market?

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The meteoric rise of Amazon, both with respect to the breadth of its business operations and stock price, continues. On news of the rumor of its potential entry into the pharmacy market, entities speculated that may feel an impact immediately sold off. Though it’s much too early to estimate the extent of any impact Amazon’s entrance into the pharmacy market may bring, let’s take look at potential implications, courtesy of healthcare and biotech contributor Alexander J. Poulos. By Alexander J. Poulos Recent Amazon Hire Ignites Speculation Amazon (AMZN) has quietly added a leader to build an in-house Pharmacy Benefit Manager (PBM) for its employees. Mark Lyons, formerly of Premera Blue Cross, has joined the e-commerce and web services giant, and … Read more

Nelson: Reminding You of Some of Our Favorites

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Sometimes we talk way too much about the incremental, the periphery, and the tactical tweaks, and not enough about our favorite ideas included in the newsletter portfolios. Let’s cover four of our favorites. By Brian Nelson, CFA Apple The market has seemingly always had Apple’s (AAPL) shares mispriced. Our fair value estimate of the iPhone giant has been above its trading price for years, and we’ve included the company in both newsletter portfolios since inception. It’s been a win-win for Valuentum investors and dividend growth investors alike. A look at Apple’s rating history (newest to oldest) showcases just how much conviction we’ve had in the idea, and shares have now almost converged to our present $165 per share fair value … Read more