DD

Delays from Asia Pressure Earnings at Potash

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Agricultural nutrient provider Potash (click ticker for report: ) announced relatively weak fourth quarter results Thursday morning. Revenue tumbled 12% year-over-year to $1.6 billion, falling below consensus estimates. Earnings also missed the mark, dropping 38% year-over-year to $0.48 per share. Company-wide gross margins sank 1,200 basis points year-over-year to 35.7% Potash, generally the company’s namesake nutrient, was weak everywhere outside of North America. Total potash volumes declined 17% year-over-year to 1.3 million tonnes, even though North American volumes were 39% above the comparable period of 2011. Going into 2013, management thinks demand for potash will remain strong in North America, mentioning on the conference call: “In North America, dry conditions persist in certain areas, but many of our customers say; … Read more

Agriculture Stands Out During DuPont’s Fourth Quarter

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Industrial bellwether DuPont (click ticker for report: ) reported somewhat weak fourth-quarter results Tuesday morning, but the firm’s previously announced strong outlook trumped the report. Revenue during the quarter was flat year-over-year at $7.3 billion, roughly as the consensus anticipated, though full-year revenue grew 3% to $34.8 billion. Earnings from continuing operations were slightly better than expected, down 58% compared to a year ago at $0.11 per share. DuPont’s agricultural segment posted improved results, with revenue jumping 18% year-over-year to $1.5 billion. Although the fourth quarter generally includes losses in the segment, performance continues to improve, as shown below (Image Source: Q4 2012 DD Earnings Presentation). The strength in agriculture doesn’t surprise us, as the demand for food continues to grow … Read more

Monsanto Crushes the Quarter on Strong Seed Demand

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Following the weak North American farm yields in 2012, demand for Monsanto’s (click ticker for report: ) enhanced seed products drove fantastic fiscal year 2013 first quarter results. Revenue increased 21% compared to the same period a year ago to $2.9 billion, well above consensus estimates. Earnings grew 169% year-over-year to $0.62 per share, well in excess of consensus expectations. The results came as a bit of a surprise, even after seed competitor DuPont (click ticker for report: ) announced that it expected agricultural sales to accelerate in 2013, as the firm did a fantastic job increasing profitability. Sales of corn seed and traits surged 27% year-over-year to $1.1 billion, driving the 14% revenue increase in Monsanto’s seed and genomics … 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

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

A Dual Focus on Valuation and Yield Is the Best Way to Combat Changes in Future Dividend Tax Rates

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With a potential hike in the dividend tax rate just around the corner, there is no more important time than now for income investors to evaluate their existing portfolio holdings to determine whether they are well-positioned for a higher-tax environment. Assuming there are no changes to the current trajectory, the top dividend tax rate is expected to rise to 39.6% next year (up from 15% currently), and the highest-income earners will see a Medicare surtax on top of that. Evaluate All Aspects of a Dividend Investment First of all, we think those investing in high-yielders (firms) at any price (HYAAP) may be most affected by this change in tax rates. These high-yielders at any price (HYAAP) tend to be favorites of those at or near retirement, particularly given the paltry payouts on fixed … Read more