FUL

COVID-19 Crisis Intensifies

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Image Source: CDC. Coronavirus Disease 2019 (COVID-19).  Our dearest members: — The world is being challenged today by what some including Bill Gates believe might be a “once-in-a-century pathogen.” We do not know the eventual outcome, whether the impact of this illness ends up being as profound as the Spanish Influenza of 1918-1919 (which inflicted a death toll in the tens of millions), but we maintain our view the markets have yet to come to grips with the impact of COVID-19 on economic activity and potential ramifications on the global economy and the banking system.  — What is currently a “biological” crisis may turn into an all-out global financial crisis, one that could end up worse than the 2008/2009 mortgage meltdown. Instead … Read more

Has the Stock Market Crash Begun?

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Image: CDC. Transmission electron microscopic image of an isolate from the first U.S. case of COVID-19, formerly known as 2019-nCoV. The spherical viral particles, colorized blue, contain cross-section through the viral genome, seen as black dots. Dear members: This article is our fourth update on COVID-19. The previous three installments can be found here (Feb 22), here (Feb 7) and here (Jan 31). We trust you and yours are well during this global crisis. It’s hard to turn on the television these days without hearing about COVID-19, a novel coronavirus and respiratory illness that continues to spread from person to person around the world. COVID-19 is deadly, and particularly deadly among those 60 years of age and older and those … Read more

ALERT: Adding Market Crash ‘Protection,’ Removing MSFT, BKNG

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Image source: Centers for Disease Control and Prevention.  ALERT: Adding Market Crash ‘Protection,’ Removing MSFT, BKNG — Changes to newsletter portfolios — We’re adding out-of-the-money put options to both the Dividend Growth Newsletter portfolio and Best Ideas Newsletter portfolio. — We’re removing Microsoft from the Dividend Growth Newsletter portfolio. — We’re removing Booking Holdings from the Best Ideas Newsletter portfolio. — By Brian Nelson, CFA — We’re making some moves in the newsletter portfolios today.  — The Dow Jones Industrial Average (DIA) is currently indicated down 900+ points in pre-market trading during the session Monday, February 24. We laid out a thesis where the US markets could experience a “crash,” and we encourage you to read that take here, “Is a … Read more

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

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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

Resetting Your Mental Model

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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

PPG Industries’ Latest Earnings Report Indicates Softer Industrial Activity Ahead

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Image Shown: Capitalizing on the various lucrative opportunities the aerospace industry offers PPG Industries Inc underpins its long-term free cash flow trajectory. Image Source: PPG Industries – December 2019 IR Presentation By Callum Turcan On January 16, maker of painting, coating, and specialty materials PPG Industries Inc (PPG) posted fourth quarter earnings for 2019 that missed consensus estimates on both the top- and bottom-lines. Shares sold off sharply initially before recovering modestly throughout the trading session January 16. Let’s walk through PPG Industries’ quarterly performance to get a feel for how broader industrial activity is trending and why economic softness may be looming. As of this writing, PPG Industries is trading in the upper bound of our fair value estimate … Read more

Our Reports on Stocks in the Broad Chemicals Industry

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Structure of the Chemicals Industry The broad chemicals industry includes firms that make thousands of different chemical substances, ranging from basic raw materials to advanced specialty chemicals. Making chemicals is a cyclical and energy-intensive business, with volatile oil/gas prices influencing feedstock, operation, and transportation costs. Specialty providers can carve out niches, but commodity chemicals producers are largely undifferentiated, making it impossible to gain a sustainable competitive edge. The industry is very capital intensive, and large swings in prices and volume should be expected. We don’t like the industry structure. We’ve optimized our chemicals coverage, the reports of which can be found here.

RYAM: Terrible Business, Potentially Cheap Stock

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Image Source: First Quarter 2019 Financial Presentation Materials Rayonier Advanced Materials has seen better days, but has the market overreacted? We don’t think there are many businesses that have poorer industry structure, but if the company can get things back on track, normalized free cash flow indicates substantial upside potential. Commodity prices and tariffs remain big wild cards to this story, and the Valuentum investor always waits for technicals and momentum indicators to turn decidedly positive first. By Brian Nelson, CFA Rayonier Advanced Materials (RYAM) was spun out of Rayonier (RYN) a few years ago. The company is a leader “of cellulose-based technologies, including high purity cellulose specialties, a natural polymer commonly found in cell phone and computer screens, filters … Read more

Dividend Increases/Decreases for the Week Ending April 5

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Below we provide a list of firms that raised their dividends during the week ending April 5. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week ABB (ABB): now CHF 0.80 per share annual dividend, was CHF 0.78. Aon (AON): now $0.44 per share quarterly dividend, was $0.40. Artesian Resources (ARTNA): now $0.2459 per share quarterly dividend, was $0.2423. Bank OZK (OZK): now $0.23 per share quarterly dividend, was $0.22. Constellation Brands (STZ): now $0.75 per share quarterly dividend, was $0.74. Constellation Brands (STZ.B): now $0.68 per share quarterly dividend, was $0.67. … Read more

Brace for More Volatility

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Image shown: The S&P 500 ETF (SPY) since August of last year. The markets have broken through key support levels, and now support has become resistance. Volatility remains heightened since the low-vol ETN blew up in February. This article is the introduction to both the Dividend Growth Newsletter and High Yield Dividend Newsletter, both of which will be released today due to the holiday January 1. By Brian Nelson, CFA Markets are facing big pressure on the trading session January 3. There’s more to the story than rising interest rates. There’s more to the story than the US-China trade war. There’s more to the story than concerns about the political environment. Price-agnostic (indexing and quant) trading, as I outline in … Read more