DEO

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

by

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

Our Reports on Stocks in the Alcoholic Beverage Industry

by

Image Source: Jhong Dizon Structure of the Beverages (alcoholic) Industry The beer industry is structured as an oligopoly, with three players generating over half of industry profits. Though smaller industry constituents may price competitively at times, we view the overall industry structure as a rational oligopoly. Further consolidation in the space cannot be ruled out, and we would not be surprised to see larger players continuing to participate. Global operators will benefit from exposure to Asia, Africa, and Latin America, where beer consumption is growing at a pace several times that of mature markets such as North America and Western Europe. We like the structure of the group. We’ve reallocated our resources to cover more recession-resistant stocks. See here.

Resetting Your Mental Model

by

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

Owens-Illinois’ Debt Load Is Daunting, We Are Staying Away From This Value Trap

by

Image Source: Owens-Illinois Inc – IR Presentation By Callum Turcan Owens-Illinois Inc (OI) is a global manufacturer of glass packaging products, and we see the firm as a major beneficiary of the shift in consumer preferences towards non-plastic packaging options for health and environmental reasons. As of this writing, shares of OI yield 1.9% on a forward-looking basis after management initiated a new dividend policy that saw common quarterly payouts commence in 2019. While Owens-Illinois’ share price below $11/share, as it is at the time of this writing, appears cheap at first glance because shares are trading at a steep discount to our $17 per share fair value estimate, we caution that its technicals are telling another story. Investors were … Read more

Valuentum Stock Screeners

by

This article was sent to members via email December 29. That email can be accessed at the link that follows this article. By Brian Nelson, CFA Hi everyone, I wanted to provide an update with respect to Valuentum’s stock screeners. We believe our stock screeners are among the most robust when it comes to providing forward-looking data, or data that is important with respect to the investment decision-making process. We publish screens in each of the monthly newsletters, but we also provide a basic weekly screener for download on the left column of the website, “Download Weekly Stock Screener (xls) — login required.”   We also have other products. The more robust DataScreener, for example, is part of the quarterly Financial … Read more

Market Mayhem — Alerts for Members

by

During these extremely volatile times, it’s important to stay focused. On December 15, we informed all of our members to “Pay Attention.” Shortly thereafter, we notified members of the potential for a stock market technical breakdown. This morning, we offered a pre-market briefing about the importance of thinking about portfolio protection. For Best Ideas Newsletter and Dividend Growth Newsletter members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=e2406cd6-c113-4344-8731-493f33fc44a4&id=preview For High Yield Dividend Newsletter members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=b3ba530f-38b3-489a-ac96-2961dca89c6b&id=preview For Exclusive members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=ba6d90c0-4433-48b2-9b8a-aac4ddf9006e&id=preview We’re here for any questions. Please just let us know how we can help! Kind regards, Brian Nelson, CFA  brian@valuentum.com

Constellation Sets Optimistic Tone, Outlines Cannabis Opportunity

by

Image Source: Constellation Brands The producer of beer, wine and spirits reported excellent second quarter fiscal 2019 results and described cannabis as a “once-a-century disruptive market transition.” Without a doubt, the opportunity in cannabis looks tremendous, but the landscape is fast-evolving. We think Constellation will be a long-term winner in the space, but outsize profits in cannabis may be tough to come by initially. By Brian Nelson, CFA Constellation Brands (STZ) reported solid second quarter fiscal 2019 results October 4 that showed a very healthy and growing business. Net sales advanced 10%, while operating income increased 9% on a comparable basis. The company raised its fiscal 2019 earnings per share outlook to $14.10-$14.25 on a reported basis (was $11.47 in … Read more

In the News: Pot, Pop, and Pricing Wars

by

By Kris Rosemann The Growing Pot Market As the number of states legalizing recreational marijuana continues to grow, investor interest in the space continues to rise and the public stigma around the substance continues to fall. According to a recent RBC note, roughly 83% of Americans believe marijuana should be legal in some capacity, suggesting further decriminalization and/or outright legalization is likely to take place in coming years, a notion supported by Canada’s recent nationwide legalization. RBC also estimates that legal marijuana sales in the US will grow at a 17% compound annual growth rate over the next decade to approximately $47 billion in legal annual sales. Current recreational sales of marijuana in the US, both legal and illegal, are … Read more

Valuentum’s Weighted Average Cost of Capital (WACC) Distribution

by

The weighted average cost of capital is one of the most subjective measures in corporate finance, but it is also one of the most important ones. “The most important item over time in valuation is obviously interest rates…If interest rates are destined to be at low levels…It makes any stream of earnings from investments worth more money. The bogey is always what government bonds yield….Any investment is worth all the cash you’re going to get out between now and judgment day discounted back. The discounting back is affected by whether you choose interests rates like those of Japan or interest rates like those we had in 1982…When we had 15 percent short-term rates in 1982, it was silly to pay … Read more

Study: Valuentum’s Best Ideas Newsletter Portfolio

by

To read the study, please click on the image to download the pdf document (pdf).