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Amazon: The Destroyer of Other Companies’ Profits

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Image Source: Victor Amazon is stepping into the pharmacy business with the purchase of online pharmacy start-up PillPack. The market is implying the move will prove to be more than just a headache for those operating in the drug store/pharmacy and drug-distributor complex. Whether the impact will be significantly material in the coming years remains to be seen, but it’s a big directional negative for impacted parties. By Brian Nelson, CFA We saw the writing on the wall. We had once included CVS Health (CVS) in the simulated Dividend Growth Newsletter portfolio and the simulated Best Ideas Newsletter portfolio, but we ditched the company in February. We couldn’t envision a scenario at the time where things would be getting better … Read more

Owens & Minor: Dividend At Risk, But Shares Not Expensive

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We’re fans of consistent dividend payers with strong free-cash-flow coverage and solid balance sheets, but we remain very skeptical of companies with a dividend that seems “too good to be true” as the eye-popping dividend is often a byproduct of an egregious drop in the price of the stock. We believe Owens & Minor is an example of an overleveraged, slow-growth entity that may have trouble maintaining its dividend in coming years. We value shares at $20 each, however, so the market may be overreacting a bit on the downside. By Alexander J. Poulos Key Takeaways Business disruption has taken its toll on Owens & Minor’s margins and underlying profitability. From where we stand, there is little in the way … Read more

Study: Valuentum’s Best Ideas Newsletter Portfolio

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To read the study, please click on the image to download the pdf document (pdf).

Generic Drug Deflation Continues to Hamper Cardinal Health and AmerisourceBergen

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A severe case of rampant generic drug deflation continues to hamper the share prices of Cardinal Health and AmerisourceBergen. We are monitoring the drug deflation numbers posted by the drug wholesalers as a key gauge of the investment merits of the group. By Alexander J. Poulos Key Takeaways Our interest in the drug-distribution industry centers on the group’s highly-predictive revenue model and the strong competitive positions of many underlying participants, emanating from their difficult-to-replicate distribution networks. The drug distribution industry is currently an oligopoly with McKesson, Cardinal Health and AmerisourceBergen controlling over 90% of the business. Generic drug price deflation continues to have a noticeable impact on the drug distribution industry as witnessed by the poor performance during the past … Read more

ICYMI: Valuentum’s Improved Stock and ETF Web Pages

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Valuentum has rolled out improved stock and ETF web pages on its website valuentum.com/. Now, subscribers can access key proprietary information on the stock and ETF web pages in addition to the customary stock and ETF reports. Dear reader, We have some exciting news that we can’t wait to share with you! At valuentum.com/, we have rolled out new stock and ETF pages that conveniently include a variety of our proprietary metrics from the Dividend Cushion ratio to the Economic Castle rating and beyond! There’s even mouseover functionality so you can learn about how we define the key metrics across our stock-selection and dividend growth methodologies. You’ll still have access to the stock and dividend reports on the landing pages, … 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.

Subscribe: The Nelson Exclusive Is Simply One of a Kind

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“I think the Nelson Exclusive publication is worth far more than what we charge for it, and we’re making it even better.” Hi folks, I have to admit that I was quite worried about launching the Nelson Exclusive May 2016. I didn’t know what to expect, and as we’ve progressed with new ideas each and every month, I’ve been working hard to incorporate feedback. For starters, we’re going to be moving to tracking the income characteristics of the income ideas on a go-forward basis as a measure of their success. Many members have voiced this long-term income-oriented preference, and frankly we think it makes a lot of sense. Not one income idea in the Exclusive has cut its dividend! But … Read more

Boeing!

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Image shown: Boeing’s shares have been rocketing higher of late!  We couldn’t be more pleased with how one of our best ideas for consideration has performed: Boeing! By Kris Rosemann Dividend Gowth Newsletter portfolio idea Boeing (BA) continues its tremendous share-price run of late, hitting all-time highs following its earnings report before market open January 31. The aerospace giant turned in 9% revenue growth on a year-over-year basis, while GAAP earnings per share doubled from the year-ago period to $5.18. Free cash flow remained robust in the full-year 2017, advancing to ~$11.6 billion from ~$7.9 billion in 2016. The company expects operating cash flow to climb to ~$15 billion in 2018 (up from $13.3 billion in 2017), and its revenue … Read more

Admit It: You Know Nothing About the Dividend

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President of Investment Research Brian Nelson talks about how the concept of a dividend is completely miscontrued due to societal and cultural reasons, but he also explains why he likes dividends. Warning: He’s going to bust out Monopoly pieces. You don’t want to miss this! Running time: ~15 minutes.

I Love Dividends But the Dividend Discount Model is DEAD!

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President of Investment Research Brian Nelson gives a plethora of reasons why the dividend discount model is dead and expresses his worries about how it continues to be used academically and professionally. Also included is a discussion about why the weighted average cost of capital, or the WACC, is used in the enterprise free cash flow valuation process, or the free cash flow to the firm process. Running time: ~13 minutes.