DTE

Nelson: I Have Been Wrong About the Prospect of Near-Term Inflationary-Driven Earnings Tailwinds

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Transcript During the past several weeks, we’ve grown increasingly concerned about the health of consumer-tied entities across not only the consumer staples but also the consumer discretionary spaces. Many consumer staples entities, while raising prices, aren’t raising them fast enough to drive operating-income and bottom-line expansion, while many consumer-discretionary companies are facing higher freight and logistics costs and weaker performance in China, perhaps best revealed by Nike’s most recently-reported quarter, where inventory advanced 23% compared to the prior-year period. The tell-tale sign about the health of the consumer may be Amazon (AMZN) Prime Day, which is coming up on July 12-13, but based on many of the reports we’ve monitored this past earnings season, even if sales are strong on … Read more

WEC Energy Is a Solid Utility with a Nice Yield

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Image Source: WEC Energy Group Inc – March 2022 IR Presentation By Callum Turcan WEC Energy Group Inc (WEC) is a holding company that owns electric and natural gas utilities in the Upper Midwest (Minnesota, Wisconsin, Michigan, and Illinois), a ~60% stake in American Transmission Company (its service area is in the Upper Midwest and overlaps with the operations of WEC Energy’s other utility assets), and the merchant power firm WEC Infrastructure. WEC Energy serves roughly 4.6 million customers across its service area. Some of its electric and natural gas utilities include Upper Michigan Energy Resources Corporation, Wisconsin Public Service Corporation, Minnesota Energy Resources Corporation, Peoples Energy LLC, The Peoples Gas Light and Coke Company, North Shore Gas Company, W.E. … Read more

NextEra Energy’s Bright Outlook

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Image Shown: NextEra Energy Inc, one of our favorite utilities, owns the largest regulated electric utility in Florida and has exposure to the state’s promising population and economic growth trajectory. The utility is shifting its power generation base away from coal and towards renewable energy, leaning on natural gas and nuclear power plants to make the transition feasible. Image Source: NextEra Energy Inc – Fourth Quarter of 2021 IR Earnings Presentation By Callum Turcan The U.S. utility sector (XLU) is home to some high-quality income generating opportunities, especially utilities with exposure to states that are experiencing strong population and economic growth. Rising interest rates down the road may be a concern, though geopolitical headwinds as a result of the Ukraine-Russia … Read more

Our Report on Stocks in the Utilities (Mid/Small) Industry

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Structure of the Utilities Industry Utilities provide an essential service, generally operate in a near-monopoly position, and benefit from significant barriers to entry due to the capital intensity of new projects and regulatory/environmental requirements. Regulatory frameworks differ across the grid, but most utilities benefit from an assured rate of return on capital investments through predetermined rate structures, where cost adjustments are made by authorities periodically. Most constituents benefit from stable operations and generally lower debt financing, though credit ratings should be monitored closely. We like the structure of the group. Please select here (pdf) to download the report on utilities in our coverage. —– Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value … Read more

Don’t Throw the Baby Out with the Bathwater

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Image: Erica Nicol Takeaways: Junk tech should continue to collapse, but the stylistic area of large cap growth and big cap tech should remain resilient. Moderately elevated levels of inflation coupled with interest rates hovering at all-time lows isn’t a terrible combination. In fact, it’s not bad at all. The markets are digesting the huge gains of the past few years so far in 2022, and the excesses in ARKK funds, crypto, SPACs, and meme stocks are being rid from the system. Our best ideas are “outperforming” the very benchmarks that are outperforming everyone else. The BIN portfolio is down 6.4% and the DGN portfolio is down 3.2% year to date. The SPY is down 7.8%, while the average investor … Read more

Hard Work and the Trust That Binds

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Image Source: Terry Johnson By Brian Nelson, CFA We’ll have our traditional Valuentum Weekly email coming out on Sunday, and I’m excited to say our team is putting the finishing touches on our technology industry update, so we’ll have a whole bunch of fresh reports for you to look at Sunday evening/Monday morning. It’s easy to forget how much we’ve been through the past two years. Often, we forget how helpful the warning that markets were going to crash was the weekend before they did on February 22, 2020, “Is a Stock Market Crash Coming? – Coronavirus Update and P/E Ratios,” how we thought dollar-cost-averaging made sense at the bottom in March 2020, and how we went “all-in” in April … Read more

PPL Corp Updates Investors, Launches Share Buyback Program

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Image Source: PPL Corporation – Second Quarter of 2021 IR Earnings Presentation By Callum Turcan On August 5, PPL Corporation (PPL) posted second quarter 2021 earnings, and shares of PPL initially moved higher after the report. Though the gas and electric utility, which has a major regulated utility presence in Kentucky and Pennsylvania, missed both top- and bottom-line estimates, what investors were likely focused on most was the announcement that PPL Corp had approved a $3.0 billion share buyback program. The firm expects to spend $0.5 billion buying back its shares in 2021, and we view this as a solid use of PPL Corp’s capital given our fair value estimate sits at $45 per share of PPL, well above where the … Read more

ICYMI — Video: Exclusive 2020 — Furthering the Financial Discipline

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ICYMI — Video: Exclusive 2020 — Furthering the Financial Discipline — — In this 40+ minute video jam-packed with must-watch content, Valuentum’s President Brian Nelson talks about the Theory of Universal Valuation and how his work is furthering the financial discipline. Learn the pitfalls of factor investing and modern portfolio theory and how the efficient markets hypothesis holds little substance in the wake of COVID-19. He’ll talk about which companies Valuentum likes and why, and which areas he’s avoiding. This and more in Valuentum’s 2020 Exclusive conference call.   Note: This video was originally published August 2, 2020.    To watch the video >>   The Theory of Universal Valuation —– Valuentum members have access to our 16-page stock reports, … Read more

Utility PPL Is Pursuing a Major Transformation and Has a VBI Rating of 9

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Image Source: PPL Corporation – First Quarter of 2021 IR Earnings Presentation By Callum Turcan PPL Corporation (PPL) operates several utilities in the US and the UK, though the company is in the process of selling its UK utility business (Western Power Distribution) to National Grid plc (NGG). When including the assumption of approximately GBP£6.6 billion in debt, this deal has a transaction value of roughly GBP£14.4 billion and is expected to generate about USD$10.2 billion in net cash proceeds for PPL. Additionally, as part of this arrangement, PPL will acquire National Grid’s Rhode Island utility business in the US (Narragansett Electric Company). When including the assumption of approximately USD$1.5 billion in debt, this deal has a total transaction value … Read more

ALERT: Raising Cash in the Newsletter Portfolios

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January 27, 2021 ALERT: Raising Cash in the Newsletter Portfolios We are raising the cash position in the simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio to 10%-20%. — By Brian Nelson, CFA — Our research has been absolutely fantastic for a long time, but 2020 may have been our best year yet. You can read the 2020 recap here. With the S&P 500 trading within our fair value estimate range of 3,530-3,920 (and the markets rolling over while showing signs of abnormal behavior), we’re raising the cash position in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio to 10%-20%. — For more conservative investors, the high end of this range may even be larger, especially … Read more