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Excited About Putting Cash to Work…Eventually

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Investors are fretting over a lot of things as of late. China (FXI) announced January 19 that fourth-quarter GDP fell to 6.8%, with many noting that the measure was a 25-year low. Even if you believe that number, which may be a stretch in light of collapsing local stock markets in Shanghai and Shenzhen, the outlook can’t be much better. Steel mills across the country are reeling, and while published housing numbers don’t look that bad, we have a difficult time believing the Chinese banks are in good shape. HSBC (HSBC), Standard Chartered, and Citigroup (C) remain most exposed to what we would describe to be the growing likelihood of a contagion from weakening commodity-dependent sectors in the country. Intel … Read more

The 20 Something’s Stock Portfolio

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A version of this article appeared on our website March 31, 2015. <Our best ideas at any time are included in the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio.> The “20 Something’s Stock Portfolio” is the first in a series of articles where we get to the core of what many brand new investors want to do when they are first introduced to the stock market: find exciting companies that they are familiar with that will help compound their wealth over time. Other portfolios that we will share in this series include “The Ultra High Income Portfolio,” “The Economic Castle Portfolio,” “The Dividend Cushion Portfolio,” and “The Intelligent ETF Investor’s Portfolio,” among others. The series of portfolios will … Read more

Social Media Update

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Note: Valuentum covers over a thousand companies and offers insights and updates behind core holdings in the newsletter portfolios. We did a more in-depth analysis of the “investability” of social media players at the end of the second quarter, and not much has changed. Twitter (TWTR) found its long-term answer at CEO, but its valuation distribution, or range of probable fair value outcomes, is equivalent to a lotto ticket, one that’s not likely to pay off. Facebook (FB) continues to put up astounding numbers of active users, and LinkedIn (LNKD), while offering potential as a business-networking social media site remains unproven through the course of a more challenging job market, in our view. On fundamental basis, Facebook is our favorite … Read more

Alphabet (Google) and eBay Power Best Ideas Newsletter Portfolio!

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It’s no secret that the Internet and the companies that operate within the Internet space are always changing. There must be continuous innovation and re-discovery to keep up with the competition to amaze society with the next great development. Consumers have become accustomed to many of the Internet giants doing just that, pushing the envelope and enriching their lives with a better, faster, or more convenient way of content consumption. One of the many struggles that Internet-based entities have is not only how to create these new products, devices, or programs, but also how to monetize such breakthrough endeavors successfully. In a fast-changing environment, it is never easy to deliver sustainable, profitable and innovative growth. Let’s take a look at … Read more

The Flight to Safety

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Image Source: Pravine Chester It’s no secret that investors have been disappointed with returns across the equity market in 2015, and this week has not made the unrest any easier to deal with. Money managers across the globe will be looking at a short-term chart of the S&P 500 (SPY), observing that the broad US index has finally broken down from a critical multi-month base, and many will look to “lighten up” on some of their equity positions that they have been reluctantly “letting run” for months. It is no surprise to us why Netflix (NFLX) was one of the market’s worst performers in Thursday’s trading session. The company is trading at nearly 500 times earnings (not a typo), and the low … Read more

How Large Will Alibaba Be in 2035… That’s the Right Perspective

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We’re not happy with Alibaba’s (BABA) share price performance. It has been one of our rare losers in the Best Ideas Newsletter portfolio. Our thesis on Alibaba continues to be a long-term one, however, and unless China enters a 20-year bear market, never again reaching the heights of yesteryear, we’re not worried about it. But that said, we’re not oblivious to the near term and may lighten up on the dwindling position in hopes that a better, lower price can be established. We won’t do so without emailing an alert first, which is standard practice with newsletter constituents. We won’t harp on Alibaba’s fiscal first-quarter results, released August 12, which showed revenue advancing nearly 29% and earnings coming in a … Read more

Social Media Posts Mixed Trends

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Image: Twitter has tumbled significantly following the release of the past two of its quarterly earnings reports. The difference between a social media network success story and failure is simple: product iteration and innovation coupled with disciplined execution. This has been the difference between social media giant Facebook (FB) and Twitter (TWTR). While Twitter has spent time fighting through management shifts and attempting to discover its true calling as a social media platform, Facebook has been busy growing its global scale. LinkedIn (LNKD) continues to navigate its wide range of fair value outcomes, and we maintain our view that the company’s business model has yet to be tested. Twitter’s Valuation Distribution: A Lotto Ticket Twitter is still in the midst … Read more

Google Shows Why It Has Been a Best Idea

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Sometimes valuation is its own catalyst. That’s what we think has happened to Google (GOOG, GOOGL). This isn’t our first note on Google; the search giant was added to the Best Ideas Newsletter portfolio October 2012 at ~$340. Shares are approaching $700 at present. As with all of the holdings in the newsletter portfolios, they represent our best ideas at any given time. Image Source: Google Google’s financial profile continues to be one of the best in our coverage universe. A cash balance of nearly $70 billion showcases the firm’s tremendous financial flexibility; its short and long-term debt was just over $5 billion at the end of the second quarter. Cash flow generating from operating activities expanded nicely on a … Read more

Goodbye Radio Shack, Hello Office Products Behemoth

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RadioShack will close its doors, while Staples and Office Depot are planning to tie the knot. 3D printing stocks may be in for a world of hurt in 2016, while GM and Ford benefit from strong employment and low gas prices. RadioShack (RSH) has finally defaulted on its debt. The company is reportedly in talks to sell half of its stores to Sprint (S) and close the remainder, should Amazon (AMZN) lose interest. Standard General, the largest shareholder in the archaic electronics retailer holds most all the cards, however, and we’ll soon see whether complete liquidation is in RadioShack’s future in the coming days. The sad reality is that the struggling electronics store chain may only have its real estate … Read more

Reiterating Our $100 Per Share Valuation of Facebook

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Summary: We think Facebook has just scratched the surface of its earnings potential. Let’s address the potential for a single stock bubble in Facebook, the company’s most recent results, and why we think it garners a very attractive Economic Castle rating. We value shares of Facebook at $100 each, implying roughly 25% upside based on the firm’s most recent closing price. ———- “Intrinsic value represents the conclusion to any and all stock research: What is the company worth? DCF valuation captures the expectations of a firm’s competitive advantages, growth prospects, strategic endeavors, and any other qualitative factor. No other process does this. Putting to numbers a plethora of advanced fundamental items in arriving at a fair value estimate is the … Read more