CACC

Large Cap Growth Has More Room To Run

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“The stylistic area of large cap growth has been one of our favorite areas because of the strong net cash rich, free cash flow generating, secular growth powerhouses that make up much of the space. The image is a rundown of the key Valuentum statistics for the top 15 holdings of the Schwab U.S. Large Cap Growth ETF (SCHG). We believe where large cap growth goes, so does the broader market, considering the hefty weightings of some of these stocks in other broad-based indices. Based on the high end of our fair value estimate range for this group of bellwethers, the broader U.S. markets still have room to run, to the tune of 7%+, despite the many highs already reached … Read more

June Dividend Growth Newsletter & Intrinsic Value Investing

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“But how, you will ask, does one decide what [stocks are] “attractive”? Most analysts feel they must choose between two approaches customarily thought to be in opposition: “value” and “growth,”…We view that as fuzzy thinking…Growth is always a component of value [and] the very term “value investing” is redundant.“  —                — Warren Buffett, Berkshire Hathaway annual report, 1992 — By Brian Nelson, CFA — To add our new options commentary to your membership, please register here ($500/year). — Hi everyone!  — We remain unequivocally bullish on the markets and intrinsic value investing. We believe value today rests within companies that have strong net cash positions (all cash less short- and long-term debt) and solid expected future free cash flows … Read more

Who’s Driving Who: The Future of the Automakers

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Image Source: HimmelrichPR Let’s dig into some recent developments surrounding the auto market, and how technological and strategic innovation could reshape the future of the space. By Kris Rosemann There have been a number of interesting developments related to the auto space recently, from Theresa May and the UK government triggering Brexit to pressure on the US used vehicle and auto lending markets to the seemingly inevitable proliferation of autonomous vehicles. Such progressions should not come as a surprise; in fact, we outlined some potential concerns with the long-term health of the US auto market in July 2016, “Sharp Curves Ahead for US Auto Market?” The cyclical US auto market may be plateauing after multiple years of tremendous sales levels … Read more

Major Automakers: Fundamental Uncertainty But Potential Investment Opportunity…Soon

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Source: YCharts The fates of major US automakers General Motors and Ford remain as tethered as ever, but we remain in awe at how punitive “this” frothy market is on their respective valuations. For one, GM is trading at 5 times forward adjusted earnings and boasts a near-5% dividend yield! By Kris Rosemann The market has been very kind to some, but perhaps overly punitive to others. While dividend-rich consumer staples giants continue to garner the favor of investors, “A Kleenex? Consumer Staples Trading At Nosebleed Levels (August 2016),” the ‘Detroit Three’ — Ford (F), General Motors (GM), and Chrysler (FCAU) — have all trailed the S&P 500 Index (SPY) return thus far in 2016 due to a variety of … Read more

Sharp Curves Ahead for US Auto Market?

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“Auto is clearly a little stretched, in my opinion…Someone is going to get hurt…We don’t do much of that.” — JP Morgan CEO Jamie Dimon, Yahoo Finance, June 2016  The month of May saw many major automakers report significant declines in sales in the US. Could the effect of pent-up demand for autos finally be slowing? An overheated loan market is adding concern to the situation. By Kris Rosemann Major automakers will be forced to make some important decisions in coming months. The US auto market is clearly slowing from the breakneck pace it set last year, particularly late last year, as total US auto sales fell 6% in May 2016 from May 2015. The strength of the rally in recent … Read more

Investing Versus Speculating: Ford, GM, Tesla

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Ford is making some changes at the top, but we still like General Motors. Tesla’s stock remains “uninvestable,” in our view. By Brian Nelson, CFA There are many definitions of investing and speculating that run the gamut from the views of investor Benjamin Graham to famed trader Jesse Livermore, but I have rather simple definitions of investing and speculating. Investing involves estimating a company’s intrinsic value and buying a stock when one thinks the price is far below intrinsic value and holding that security until price reaches intrinsic value, or through the high end of an informed fair value range, for example. This definition of investing and the art of intrinsic value estimation are core and vital to the Valuentum … Read more

Stock Market Outlook for 2021

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By Valuentum Analysts February 8, 2021 2020 was one for the history books. We covered our thoughts and reflections on the past year in our “2020 Won’t Soon Be Forgotten” article (link here), and now we are looking towards the future. Global health authorities should be able to bring an end to the ongoing coronavirus (‘COVID-19’) pandemic sooner than many had expected as several vaccines have already been improved for emergency use and several others appear increasingly likely to get approved. Global vaccine distribution activities are currently underway, and this should allow the world to slowly return to pre-pandemic activities. Before then, immense stimulus measures launched primarily in developed nations should support global economic activities until the public health crisis … Read more