CBRL

Has the Stock Market Crash Begun?

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Image: CDC. Transmission electron microscopic image of an isolate from the first U.S. case of COVID-19, formerly known as 2019-nCoV. The spherical viral particles, colorized blue, contain cross-section through the viral genome, seen as black dots. Dear members: This article is our fourth update on COVID-19. The previous three installments can be found here (Feb 22), here (Feb 7) and here (Jan 31). We trust you and yours are well during this global crisis. It’s hard to turn on the television these days without hearing about COVID-19, a novel coronavirus and respiratory illness that continues to spread from person to person around the world. COVID-19 is deadly, and particularly deadly among those 60 years of age and older and those … Read more

ALERT: Adding Market Crash ‘Protection,’ Removing MSFT, BKNG

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Image source: Centers for Disease Control and Prevention.  ALERT: Adding Market Crash ‘Protection,’ Removing MSFT, BKNG — Changes to newsletter portfolios — We’re adding out-of-the-money put options to both the Dividend Growth Newsletter portfolio and Best Ideas Newsletter portfolio. — We’re removing Microsoft from the Dividend Growth Newsletter portfolio. — We’re removing Booking Holdings from the Best Ideas Newsletter portfolio. — By Brian Nelson, CFA — We’re making some moves in the newsletter portfolios today.  — The Dow Jones Industrial Average (DIA) is currently indicated down 900+ points in pre-market trading during the session Monday, February 24. We laid out a thesis where the US markets could experience a “crash,” and we encourage you to read that take here, “Is a … Read more

Is a Stock Market Crash Coming? — Coronavirus Update and P/E Ratios

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Image Source: World Health Organization, Coronavirus disease 2019 (COVID-19), Situation Report — 32 We don’t think this is the environment to put new capital to work, and we remain highly cautious of what COVID-19 means for global economic growth not just in the first quarter of 2020 but for the rest of this year (maybe longer). Right now, the US markets are not really factoring in anything related to COVID-19, and perhaps may be adjusting to China’s stimulus in artificially propping up the markets as if the outbreak is somehow a “positive thing.” With the S&P 500 trading at 19.0 forward earnings estimates–estimates that are likely too high given the evidence we are seeing with respect to a slowdown due … Read more

Resetting Your Mental Model

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Image Source: affen ajlfe A version of this article was originally published on our website October 6, 2013. Having the right mental model and using the right information can be the reason why you win or lose in investing. “What is the definition of timeliness? Many believe it is getting information to investors as quickly as possible after an event, or updating something every single day or week for immaterial information. I believe in a different definition of timeliness. I believe timeliness is using all information available in a mosaic approach to accurately predict the event before it even happens. Take Kinder Morgan as the latest example. We were the only ones predicting what was going to happen before it did. To investors, … Read more

Capital Appreciation or Dividend Growth?

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Image source: David Mulder By Brian Nelson, CFA Hope you are doing great! We had one question why we didn’t include an evaluation of the six ideas that were closed in the Dividend Growth Newsletter portfolio during 2019. Of course, these ideas matter, but let’s walk through why. For example, one dividend growth idea that was closed during 2019 was Xilinx (XLNX), with the stock ending 2018 at a close price of $85.17 (it opened 2019 at $83.39) surging to $116.55 by February 14, 2019 (the low on the session of its close date) for a ~37% gain in a very short time (excluding the $0.36/share dividend it paid along the way). Xilinx was a huge winner in the Dividend … Read more

Dividend Growth Newsletter Portfolio Delivers Again in 2019

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Dividend Growth Newsletter Portfolio Delivers Again in 2019   —  Note: Due to the New Year holiday, we will be releasing the January 2020 editions of the Dividend Growth Newsletter and High Yield Dividend Newsletter Thursday, January 2.  —  By Brian Nelson, CFA    Hi everyone!   I haven’t forgotten about you, our dividend growth friends. At Valuentum, we’re huge fans of dividend growth stocks, and we use our valuation expertise to augment a newsletter portfolio of some of the best dividend growers on the market. Unlike other shops and most blogs that focus more on dividend growth track records, we also like to look forward, not only in the application of the forward-looking Dividend Cushion ratio, but also as … Read more

Cracker Barrel Doing Well Despite Industry Headwinds

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Image Source: 2019 Annual Shareholder Meeting, November 21. Although the restaurant business continues to face pressures, Cracker Barrel’s fundamentals have outperformed. By Brian Nelson, CFA The month of October was not kind to many in the restaurant business. While restaurant same-store sales advanced 0.06% in October, according to data from TDn2K, comparable traffic fell 3.1% during the month. While comp sales for the broader restaurant industry may remain positive through the remainder of 2019 thanks to pricing growth, the problem is that to-go and off-premise sales are hurting traffic. Here’s what TDn2K had to say about that: The erosion of guest counts remains unchanged, as restaurants rely on to-go and off-premise sales to fuel growth. Third-party delivery is playing a … Read more

Our Reports on Stocks in the Restaurants – Fast Casual & Full Service Industry

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Structure of the Restaurants – Fast Casual & Full Service Industry The restaurant industry has benefited from a long-term trend toward eating out, but the space has become increasingly more competitive as new concepts are introduced and successful chains expand. Not only are there pricing pressures and trade-down threats, but rising costs for commodities and labor have pressured profits. Barriers to entry are low, and many constituents have a difficult time differentiating themselves. We tend to like larger chains that benefit from scale advantages and international expansion opportunities, though niche franchises can be appealing. We’re neutral on the structure of the group. For coverage of firms in the Restaurant – Fast Casual & Full Service Industry, please click here.

McDonald’s Not on the Value Menu

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We can’t get anywhere close to McDonald’s share price with our discounted cash-flow valuation process. That doesn’t mean that shares are destined to fall, but it may indicate that the stock has pulled forward future returns. In any case, investors in McDonald’s should be cautious. By Brian Nelson, CFA McDonald’s (MCD) has done a wonderful job in years past, pursuing all-day breakfast and transitioning (even) more to a franchise business model, but these changes are now behind the fast-food restaurant. Our fair value estimate for McDonald’s is in the mid-$150s (its shares are trading over $200), and frankly, we’re having a very difficult time coming anywhere close to how high the market is valuing shares. During the firm’s second-quarter results, … Read more

New Highs! The December Call Has Been Well-Rewarded

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Image shown: Valuentum’s Dividend Growth Newsletter portfolio. Since inception, the newsletter portfolio has *never* had a constituent that experienced a dividend cut. We moved to weighting ranges beginning in 2018.   “The less the prudence with which others conduct their affairs, the greater the prudence with which we must conduct our own.” – Warren Buffett (2018) By Brian Nelson, CFA While others are celebrating, we know better. This market could come down upon itself like nothing else. But for now. We breathe a sigh of relief. A company, Valuentum, that emphasizes the importance of timing and then delivers on that cold December 26 day to move to all-in in the newsletter portfolios is something remarkable (see image below). We cannot go back to … Read more