CSCO

Could the FCC Hurt Carriers’ Profits?

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Reports have surfaced that the FCC wishes to create a free, nation-wide WiFi network in order to facilitate web and cellular traffic. Though plans are only in the initial stages (and we are not jumping to any conclusions), the government could provide the US with a high-speed network at no cost, helping to put the nation on par with the Internet service achieved in several other countries. The news does not alter our fair value estimates for companies in our coverage universe, pending new details regarding probability and timing of implementation. Understandably, the companies that currently own spectrum and experience fantastic returns on networks are a bit upset about the possibility. The high margins achieved by wireless operators Verizon (click … Read more

Intel Punished for Investing in the Future

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Thursday afternoon, semiconductor giant Intel (click ticker for report: ) reported better than expected fourth quarter results. Revenue declined 3% year-over-year to $13.5 billion, roughly in-line with consensus expectations. Earnings easily exceeded modest estimates, falling 25% year-over-year to $0.48 per share. Due to the weak PC market and the firm’s desire to clear inventories, gross margins were down significantly in the fourth quarter, falling 650 basis points year-over-year to 58%. Gross margin declines were the primary driver behind the lapse in profitability, but research & development costs increased $300 million compared to the same period of 2011 to 19.5% of sales (up 290 bps Y/Y). On a segment basis, the PC Client Group, not surprisingly, drove the majority of revenue … Read more

Fiscal Cliff Averted; Aerospace Rallying

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After a volatile December, two of our favorite aerospace names, Astronics (click ticker for report: ) and EDAC Technologies (click ticker for report: ), are rallying significantly after a deal was finally reached to avert the fiscal cliff. Precision Castparts (click ticker for report: ), which had steadily moved higher during the fiscal-cliff ordeal thanks to optimism surrounding its planned acquisition of Titanium Metals (TIE), is also seeing strength today. We assumed both profit taking and overblown fears of defense cuts were the culprit behind the increased volatility, and it seems as though that could be the case. We continue to see substantial upside at these firms thanks to the massive, multi-year commercial aerospace backlogs of the large airframe makers. Our Best Ideas portfolio … Read more

The Valuentum Dividend100 Publication; A Must-Have For Any Income Investor

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Dividend investors literally have thousands of income stocks to choose from. So what are they to do, and where can they go for the most trusted forward-looking opinions on dividend growth and safety? That’s the question we seek to answer with our ValuentumDividend100 publication. In this document, we showcase the top 100 high-quality, dividend growth gems within our coverage universe. Whether you’re looking to build a portfolio consisting of high-yielding, dividend-growers or simply seeking to augment it with a few income gems, the Valuentum Dividend100 is an essential resource for any income investor. We outline some of the key components of our Dividend100 publication below, and explain how you can get the most from each of one Sign Up for … Read more

The Valuentum Ideas100; A Compilation of the Highest-Quality Firms on the Market Today!

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Financial advisors and investors literally have thousands of stocks—large and small, domestic and foreign–to choose from. So what are they to do, and where can they go to find the most trusted opinions on the highest-quality companies on the market today?   That’s the question we seek to answer with our Valuentum Ideas100 publication. In this document, we showcase the highest-quality firms from each sector (100 in total) on the basis of our assessment of their competitive advantages (ROIC less WACC spread) and risk profiles (our ValueRisk™ rating). We believe the strength and sustainability of a firm’s return on invested capital (ROIC) is the best quantitative way to assess a company’s competitive advantages, and we believe a deep dive into … Read more

Dividend Growth Portfolio Modeling Made Easy!

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Empowering Dividend Growth Investors Do you or your clients have a dividend growth portfolio? If so, this model is indispensable. It’s the best tool out there to account for the quarterly reinvestment of growing dividends after adjusting for future equity price growth in a portfolio setting. This model will allow you to better plan for your and your clients’ retirement needs and has unmatched functionality. Plus, this tool has easy-to-follow instructions and is customized to provide deliverable print outs for you or your clients. Your firm’s logo can be added, too. To purchase Valuentum’s Dividend Growth Retirement Portfolio Model (Calculator), please click here! The model, built by Brian Nelson, CFA, sets out to do much more than what other simple dividend … Read more

You Are Ahead of the News As a Valuentum Member

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Remember When We Said Economic Prognosticators Were Off Their Rockers? From the September 2012 edition of our Best Ideas Newsletter (see page 2), released September 15, 2012: “Could you imagine if you had listened to bond-king Bill Gross (please note he is not the equity king), Marc Faber (author of the Gloom, Boom & Doom report) or the Economic Cycle Research Institute (ECRI), which called for a recession in September 2011 – some 30% in the S&P 500 ago (yes, 30%!). Aside from being incorrect, bearish economic prognosticators fully admit that their expectations have little to do with what may happen to the equity markets in the future (as Bernanke’s unlimited QE has shown). Still, such admissions do not stop … Read more

FAQ: Why Doesn’t the ‘Percentage Undervalued/Overvalued’ Match Up to the Actual Discount/Premium to Valuentum’s Fair Value Estimate of the Company?

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We view the intrinsic value of a firm as a range, not a single point estimate. So instead of us saying that a company is worth exactly $55 per share, for example, instead we’d say it is worth between $50 (low end) and $60 per share (high end) — think of this range as our margin of safety. We use a margin of safety due to the inherent uncertainty of predicting with absolute precision a firm’s future free cash flow stream — a firm’s future free cash flows determine our estimate of the company’s intrinsic value, and the future is not known yet. As a result, the ‘percentage undervalued/overvalued’ (as shown on our 16-page reports) is calculated by comparing the firm’s current price with the … Read more

FAQ: How Is Your Best Ideas Portfolio Doing This Year?

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At Valuentum, we task ourselves with a tall order. While most investment newsletters compare themselves to a market benchmark, we go one step further. We want to deliver positive returns to you, our subscriber, year after year, in addition to outperforming the market benchmark. Below, we outline a table that shows the outperformance we provided to our members since the time they joined.  So, for example, if you joined as a member on April 13, 2012 our Best Ideas portfolio has offered 3.8 percentage points of outperformance. Or, if you joined on July 13, 2011, our Best Ideas portfolio has offered 22 percentage points of outperformance. Importantly, did you know that, according to Advisor One, only 13% of hedge funds are beating the S&P … Read more

Special Dividends: A Fantastic Idea…Fiscal Cliff Has Started a Trend

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Throughout 2012, we’ve seen a huge surge in special dividends, with 59 companies in the Russell 3000 declaring special dividends from September to November compared to just 15 during the same period last year. The impetus is obvious: the impending fiscal cliff has left both companies and investors wondering what to do with the mountains of cash sitting on pristine balance sheets and low return prospects. As a result, companies across different sectors are declaring special one-time dividends. Costco (click ticker for report: ) will pay a one-time special dividend of $7 per share (amounting to $3 billion) as a reward to shareholders, while Tyson Foods (click ticker for report: ) declared a special one-time payment of $0.20 per share. … Read more