CVS

Dow Laggard Walgreens Boots Alliance Yields North of 5%; Has Raised Dividend for 47 Consecutive Years

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Image: Walgreens Boots Alliance’s shares have been pummeled during 2022. Image Source: TradingView By Brian Nelson, CFA When Walgreens Boots Alliance (WBA)–forward estimated dividend yield of ~5.3%– reported first-quarter fiscal 2023 results January 5, operating performance wasn’t pretty. Sales from continuing operations dropped 1.5% in the quarter, while adjusted earnings per share fell 30.8% to $1.16 per share due to weakness at AllianceRX Walgreens from difficult comps related to COVID-19 vaccines. Its predecessor company, Walgreen Co., used to be a clean “story.” Then, the firm bought Alliance Boots several years ago, and shares have languished for the better part of a decade now, after completing that transaction. Dealmaking, a dwindling stake in AmerisourceBergen (ABC) and liabilities related to the opioid … Read more

CVS Health at the Crossroads, Too Much Debt

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We have been disappointed with the lack progress displayed by CVS Health thus far in 2017. We knew the business was entering into an earnings trough as a result of key contract losses, but recent events have unfolded that, in our view, have lessened the attractiveness of its business model, to a meaningful degree. Let’s talk more about what’s happening at CVS Health, the changing PBM market, Amazon’s threat, and too much leverage. We’re not overreacting, but we’re not happy either. By Alexander J. Poulos “CVS Health hasn’t performed as we would have hoped during 2017, and frankly, it has been hit by a storm of negativity, not the least of which has been caused by the disruptive threat of … Read more

2,350-2,750 on the S&P? Could the Coronavirus Catalyze a Financial Crisis?

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Image: We think a rather modest sell-off in the market to the target range of 2,350-2,750 on the S&P 500 is rather reasonable in the wake of one of the biggest economic shocks since the Global Financial Crisis. The chart above shows how far markets have advanced since 2011, and an adjustment lower to the target range of 2,350-2,750 is rather modest in such a context and would only bring markets to late 2018 levels (note red box as the target range). The range reflects ~16x S&P 500 12-month forward earnings estimates, as of February 14, adjusted down 10% due to COVID-19. When companies like Visa talk about a couple percentage points taken off of growth rates, one knows that … Read more

The Best Years Are Ahead

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By Brian Nelson, CFA — The wind is at our backs. — The Federal Reserve, Treasury, and regulatory bodies of the U.S. may have no choice but to keep U.S. markets moving higher. The likelihood of the S&P 500 reaching 2,000 ever again seems remote, and I would not be surprised to see 5,000 on the S&P 500 before we see 2,500-3,000, if the latter may be in the cards. The S&P 500 is trading at ~4,100 at the time of this writing. — The high end of our fair value range on the S&P 500 remains just shy of 4,000, but I foresee a massive shift in long-term capital out of traditional bonds into equities this decade (and markets … Read more

Nelson: The 16 Most Important Steps To Understand The Stock Market

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A previous version of this article appeared on our website July 21, 2013. Refreshed and updated throughout, as of July 2018. By Brian Nelson, CFA After earning my MBA at the University of Chicago Booth School of Business and training stock and credit analysts from large organizations over the past decade or so, I have heard just about every question (though I admit I am still surprised by many things and remain a very humble student of the markets). I’ve also spent years perfecting the discounted cash flow process for large research organizations such as Morningstar and studied under one of the most famed aggressive growth investors of all time, Richard Driehaus. My knowledge runs the gamut from value through … Read more

There Is Milk At The Store

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This article first appeared in the September edition of the High Yield Dividend Newsletter. For more information about this publication, please see here. “Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.” — Winston Churchill By Brian Nelson, CFA Very few of us could have imagined that we’d witness the bull market that began on that fateful day in March 2009 that might very well mark a generational low. In 2009, major investment banks around the globe were struggling to survive, and the fallout in the mortgage markets left the banks holding paper that nobody wanted to own, let alone buy. The global financial system … Read more

Our Thoughts on Big Pharma’s Calendar Fourth Quarter Earnings Reports

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Image Source: Merck & Company Inc – Fourth Quarter of 2021 IR Earnings Presentation By Callum Turcan In Alphabetical Order by Ticker: ABBV, GILD, LLY, MRK We include the Health Care Select Sector SPDR Fund ETF (XLV) in the Best Ideas Newsletter and Dividend Growth Newsletter portfolios to gain broad exposure to the health care sector. Instead of betting on one entity’s pipeline (which could be hit or miss), we like the exposure to lots and lots of “shots on goal” when it comes to the vast collective pipeline in the XLV ETF. We wrote up the calendar fourth-quarter results of the top two weightings in the XLV ETF, United Health (UNH) and Johnson & Johnson (JNJ) here and here, … Read more

Dividend Increases/Decreases for the Week of January 20

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Below we provide a list of firms that raised their dividends during the week ending January 20. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week                Albertsons Companies (ACI): now $6.85 per share special dividend, was $0.12. Allied Properties Real Estate Investment Trust (AP.UN:CA): now CAD 0.15 per share monthly dividend, was CAD 0.1458. Banner (BANR): now $0.48 per share quarterly dividend, was $0.44. Birchcliff Energy (BIR:CA): now CAD 0.20 per share quarterly dividend, was CAD 0.02. Chesswood Group Limited (CHW:CA): now CAD 0.05 per share monthly dividend, was CAD 0.04. … Read more

Which Sectors Are Leading the Market Higher? And Why Is This Important?

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Missed the ’13 Most Important Steps to Understand the Stock Market’? Click here. Demand academic evidence regarding the efficacy of the Valuentum process? Click here. Tobias J. Moskowitz and Mark Grinblatt documented the “strong and prevalent momentum effect in industry components of stock returns which accounts for much of the individual stock momentum anomaly” in their scholarly article published in the Journal of Finance, ‘Do Industries Explain Momentum’ (download here; stable link here; updated by Fraulo and Nguyen here). Moskowitz and Grinblatt also concluded that “industry momentum investment strategies, which buy stocks from past winning industries and sell stocks from past losing industries, appear highly profitable.” Such findings are consistent with the ‘Case for the Valuentum Style of Investing,’ and … Read more