CPRI

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

Cole Haan Files to Go Public

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By Callum Turcan Maker of footwear, handbags, sunglasses, and various other accessories Cole Haan Inc (TBD:CLHN) has filed to go public. One thing that makes this planned IPO particularly interesting is that Cole Haan was free cash flow positive in both fiscal 2018 (period ended June 2, 2018) to fiscal 2019 (period ended June 1,2019), generating $35 million and $38 million in free cash flows, respectively. The firm plans on trading on the NASDAQ Global Select Market, run by Nasdaq Inc (NDAQ), under the ticker CLHN. Additionally, please note that after the planned IPO, funds advised by British private-equity firms Apax Partners LLP and Apax Partners are expected to continue to own a “majority… of the shares eligible to vote … Read more

Coronavirus May Trigger Long-Anticipated Global Recession

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Image: Wuhan New Coronavirus This was the catalyst that nobody was expecting, a novel coronavirus that nobody had in their economic models. We think global economic activity is slowing as we speak, and the spread of the virus may only accelerate in mainland China and elsewhere. Investors should keep a level head and perhaps think about adding protection to their portfolios before it becomes too expensive. By Brian Nelson, CFA How to Use Valuentum’s Investment Research Services >> We’ve walked through a number of scenarios that could trip the global economy into recession–global deflation that tips over the weakest European banks and causes contagion, global military conflict with North Korea or Iran that disrupts economic activity, increased volatility driven by … Read more

Valuentum Exclusive Success Rates Trump Even the Best Quant Hedge Funds

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Image: President of Investment Research Brian Nelson, CFA By Brian Nelson, CFA A new book, “The Man Who Solved the Market,” hit bookshelves last year, and thus far it has been a hit. The text goes into the story of quant hedge fund Renaissance Technologies and its hedge fund, the Medallion Fund, which has put up mammoth returns since inception. Though the book focuses more on the life and times of founder Jim Simons and dedicated only a page or two to the fall of Long-Term Capital Management (LTCM), another quant fund that went belly-up during the late 1990s, it was nonetheless a thoroughly interesting and enjoyable read. But why I am bringing up one of the most successful quant … Read more

Our Reports on Stocks in the Luxury Goods – Ultra & Aspirational Industry

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Image Source: Jill Clardy Structure of the Luxury Goods Industry Luxury goods firms differentiate themselves based on brand name, perception, and quality in order to generate excess returns on invested capital through the economic cycle. Building a large, successful luxury brand is difficult, leaving those that possess them with intangible competitive advantages that are not easily overcome by new entrants. Growth in emerging middle classes and China will be the key demand drivers going forward, though the strongest brands will also grow successfully via market share gains. Though changes in consumer preferences should be watched closely, we like the structure of the group. We’ve optimized our consumer discretionary coverage. For their reports, please click here.

ICYMI: Interview with Valuentum’s President Brian M. Nelson, CFA

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Catch up with Valuentum’s President Brian M. Nelson, CFA in a recent interview with dividend growth investor Arne Magnus Lorentzen Ulland of the blog stockles. By Brian Nelson, CFA Recently, I was interviewed by Arne Magnus Lorentzen Ulland of the blog stockles. Arne is a dividend growth investor like many of you, and I sincerely hope you enjoy the interview he put together. I’m very grateful for his interest. His questions were fantastic. We discuss why and how I incorporate independence and integrity into the service at Valuentum. We go into detail regarding why Valuentum views stocks the way it does, and how Valuentum combines enterprise valuation and the information contained in prices in its stock-selection process. I discuss the pitfalls … Read more

No Recession At Walmart; Estee Lauder Not Cheap

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Image Source: Mike Mozart Walmart’s results were quite reassuring regarding the health of the economy. There are also pockets of significant strength, with prestige beauty being catapulted by a “selfie generation.”  By Brian Nelson, CFA No Recession At Walmart Following what can best be described as “carnage” across the retail sector when Macy’s reported August 14, Walmart (WMT) eased some of the concerns in the retail sector when the bellwether reported August 15. Although Amazon (AMZN) seems to get most of the attention when it comes to assessing the health of the consumer, Walmart remains twice as large, as measured by revenue. Walmart generated ~$514 billion in revenue during its last fiscal year, while Amazon hauled in ~$233 billion. If the … Read more

Mall Retail Armageddon?

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We think investors should be extremely cautious if they are interested in any mall retailers. Mall REITs are starting to feel some of the pain, too. By Brian Nelson, CFA Our latest channel checks at the malls foreshadowed what eventually turned into a terrible showing during the first quarter for the department stores such as J.C. Penney, Kohl’s and Nordstrom, but the apparel names and other niche shops are feeling the pain, too. It is becoming eerie when visiting the malls these days. In some of the locations we’re visiting, hardly anyone is there! Generation Z may not pick up the slack from the millennial generation, and it is showing up in the numbers big time. Here’s a run down … Read more

Markets Swooning, Expect Extreme Volatility, Finger on Put-Option Trigger

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Image shown: We notified members December 26 that we had  moved  the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to a “fully invested” position, from a 30% and 20% cash “weighting” at the high end of the range, respectively.  — No change to simulated newsletter portfolios…at this time.  — Hi everyone, — Hope you’re navigating these tumultuous markets well.   — If you recall, during the holiday season last year, we had moved the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to “fully invested.” See image above (point of the arrow). Because many members were traveling and out of the office, not all were able to read the notification until a week or two after. They were … Read more

Facebook’s Huge New Opportunity in Instagram Checkout, Reiterating Fair Value Estimate ~$230

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Image Source: Facebook’s Instagram We continue to like Facebook, and we’re huge fans of Instagram Checkout. Many may not know it yet, but Instagram Checkout may mark the beginning of retailers’ websites becoming obsolete. The sell-off last summer in Facebook was a big gift for those that stuck with our thesis. Brian Nelson, CFA I think one of the things that financial advisors and financial planners do extremely well is explain the concept of patience to their clients. Can you imagine if a client cashed out upon every 15%-20% decline? That’d be a recipe for continuous disaster. On the path to the market setting broader market highs in 2018, there have been many disappointments along the way. There have been … Read more