EWQ

Best Idea Alphabet Growing Global Cloud Presence

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Image Shown: Alphabet Inc Class C shares, a top-weighted idea in our Best Ideas Newsletter portfolio, are up ~65% over the past year. By Callum Turcan Alphabet Inc (GOOG) (GOOGL) has historically focused primarily on growing its digital advertising revenues since the company was founded under the Google name back in 1998. More recently, the technology giant has begun seriously seeking to broaden its revenue base, and we like what we see on this front. We include Alphabet Class C shares (ticker: GOOG) as an idea in the Best Ideas Newsletter portfolio given its immense capital appreciation upside potential as a net cash-rich, free cash flow generating powerhouse (topics that we have covered often in the past). Our fair value … Read more

French Conglomerate Bolloré Is Intriguing

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Image Source: Bolloré SE – 2019 Business Report We are intrigued by the extensive reach of Bolloré and the very diversified nature of its asset base. The French conglomerate’s ability to generate meaningful free cash flows during the initial stages of the COVID-19 pandemic highlights the resilience of its business model and cash flow profile. However, we caution that the Bolloré family will continue to exert an outsized level of influence on the trajectory of the conglomerate going forward. Nonetheless, this is one for the radar. By Callum Turcan The French conglomerate Bolloré SE (BOIVF) is a behemoth. It operates in ~130 countries across the world, has ~84,000 employees, and is controlled by the Bolloré family. Cyrille Bolloré is chairman … Read more

Oil Markets Get Decimated

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Image Shown: Oil prices have been decimated year-to-date. By Callum Turcan We are following up on our ‘Oil Prices Collapse, Reiterating 2,350-2,750 S&P 500 Target Range; Credit Crunch Looming?’ note (link here) published Sunday, March 8, to provide additional commentary on what’s going on in the shale patch right now. As of this writing, oil prices (BNO, USO) continue to get hammered. Here’s what we had to say in that recent note: The independent upstream producer space (XOP) is careening off a cliff, and that was before the OPEC+ cartel was unable to reach an agreement during their joint meeting (OPEC and non-OPEC members) on March 6. Due to the inability for the oil cartel to reach a deal, largely because Russia … Read more

Oil Prices Collapse, Reiterating 2,350-2,750 S&P 500 Target Range; Credit Crunch Looming?

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Image Source: Value Trap: Theory of Universal Valuation From Value Trap: “The banking sector was not the only sector that faced considerable selling pressure during the Financial Crisis of the late 2000s, of course. Other companies that required funding to maintain their business operations faced severe liquidity risk, or a situation where refinancing, or rolling over debt, might be difficult to do on fair terms, making such financing prohibitive in some cases. Those that faced outsize debt maturities during the most severe months of the credit crunch faced a real threat of Chapter 11 restructuring had the lending environment completely seized. In thinking about share prices as a range of probable fair value outcomes, equity prices tend to face pressure as … Read more

Covering Oil Markets Ahead of the Upcoming OPEC/OPEC+ Meetings

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Image Source: Exxon Mobil Corporation – 2019 IR Presentation  By Callum Turcan On March 5, the Organization of Petroleum Exporting Countries (‘OPEC’) is holding an “extraordinary” meeting in Vienna, Austria (EWO), which will be followed up by a ministerial meeting between OPEC and non-OPEC members the next day. The group had already agreed to cut oil (USO, BNO) supplies by an additional 0.5 million barrels of per day (‘bpd’) back in December 2019 through an agreement that would last through March 2020 (that was on top of an existing deal to keep 1.2 million bpd off of the market which runs through the end of March 2020 as well). As part of that deal, Saudi Arabia (KSA) offered to “voluntarily” … Read more

Economic Commentary: Robots, Value Trap, and Politics on the Markets

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Tickerized for stocks in the DIA. Valuentum sat down for the latest installment of its periodic economic commentary, and the team tackled a wide array of topics, from robots on Wall Street, to President of Investment Research Brian Nelson’s new book Value Trap, to political influence on the markets and boyond. Let’s set the stage with a prompt from a recent Bloomberg article, “The Master of Robots…Coming for Wall Street:” “The problem is, computer-powered strategies are struggling to live up to the hype, with a Eurekahedge index of AI hedge funds lagging peers in recent years. That spells opportunity for the likes of Lopez de Prado with his outfit True Positive Technologies — a dig at the erroneous conclusions derived … Read more

Economic Commentary: Apple $225+, Brokers Tumble, Auto Sales Look Tired

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“Though all signs point to increased volatility, we maintain our view that we’re well-positioned in the newsletter portfolios, and the ideas highlighted in the Exclusive publication consider the backdrop economic conditions we closely monitor.” — Brian Nelson, CFA There has been plenty of news in the markets this week, with the Dow Jones Industrial Average (DIA) experiencing significant declines only to bounce back a bit. From where we stand, the markets look vulnerable technically, but that doesn’t mean we’re looking to change anything in the newsletter portfolios. We have some dry powder in the form of a ~10% cash weighting in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio. The disappointing September ADP jobs report added to lower-than-expected ISM (Institute … Read more

In The News: European Growth Concerns, Continued Weakness in Generic Pharma, Johnson & Johnson Enters Robotics Market

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Let’s take a look at some of the top stories from February 13. Concerns over industrial production in Europe may present challenges to economic growth, generic pharma companies face material competition, and Johnson & Johnson gets into the robotics market. By Kris Rosemann Equities continue to benefit from optimism surrounding US-China trade talks, as President Trump recently stated a willingness to let the March 2 trade conflict resolution deadline slide, but industrial production in Europe, which fell at the greatest sequential rate since 2009 in December 2018, has caught the eye of many a market observer. Demand softness from China (FXI) is playing a role, and the usual suspects such as Greece, Italy (EWI), and uncertainty over Brexit (EWU) continue … Read more

Uncertainty of Italy’s Political Future Weighing on Global Investors’ Minds

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Italy holds ~$2.7 trillion in public debt, and global investors are worried that a new government could implement policies that would weaken the country’s credit status. Though a sovereign debt crisis does not seem probable at this point, bond markets are suggesting that risks are rising. By Brian Nelson, CFA We do not want investors to be worried by events unfolding in Italy (EWI) of late, as they may not be any more significant than the impact of Brexit (EWU) on equity market returns during the past few years. We can’t cast a blind eye to developments either, however, as Italy’s sovereign debt is not-at-all small by any country’s standards (it’s the third-largest in the world), and the political uncertainty … Read more

Brewing the Next Dividend Aristocrat

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Image Source: Starbuck’s 2017 annual Shareholder Meeting Most income-minded investors would love to find the next Dividend Aristocrat before it earns such a title, but many continue to focus on the stars of the past instead of working to identify up and coming dividend track records, which often carry higher dividend growth rates than the most established Dividend Aristocrats. By Alexander J. Poulos McDonald’s Is Pretty Good… Starbucks (SBUX) has a number of qualities that we look for in identifying companies that can sustain a growing dividend over time, one that has the potential to develop into a Dividend Aristocrat. The company’s dividend track record is still a young one as the payout was initiated in 2010, but forward-looking analysis … Read more