GILD

Best Biotech Idea Vertex Pharma Outperforming Struggling Peers, Its New Treatment for Pain a Game Changer in the Fight Against the Opioid Epidemic

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Image: Vertex Pharma has advanced more than 18% since the beginning of 2021, trouncing the performance of the SPDR S&P Biotech ETF by an incredible margin. The outperformance gap stands at more than 50+ percentage points at the time of this writing. By Brian Nelson, CFA We were blown away by the phase II results released March 31 at Vertex Pharma (VRTX) for its non-opioid, non-addictive pain killer, the NaV1.8 inhibitor VX-548, and we think the molecule has the potential to provide a solution to the widespread opioid crisis in a meaningful way. According to the U.S. Department of Health and Human Services, tens of thousands of deaths each year are “attributed to overdosing on synthetic opioids.” The company’s phase … Read more

The Castle Trumps the Moat

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Please select the image below to download the report. Backtested results are hypothetical and do not represent actual trading. Actual results may differ from backtested information being presented. Tickerized for firms held in the Morningstar (MORN) Wide Moat ETF (MOAT) at the time of this writing.

Our Favorite Biotech Vertex Pharma Powers Ahead, Leaps 6%+

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Image: Vertex Pharma continues to soar toward our fair value estimate. By Brian Nelson, CFA  On Wednesday, January 26, Vertex Pharma (VRTX) reported solid fourth-quarter results that showed continued advancement across its clinical pipeline. For background reading on our thesis on the net cash rich, free cash flow generating biotech tied to established cystic fibrosis (CF) therapies and CRISPR technology, please read: “Best Idea Vertex Pharma Boosts Guidance (Again), Buying Back Stock While Awaiting Key Clinical Trials (December 2, 2021)” and “Best Idea Vertex Pharma Marching Forward with Innovative CRISPR Technology” (August 31, 2021).” Following fourth-quarter results, we’re reiterating our $250 per share fair value estimate at this time.   Image: Vertex finished an exciting 2021, and we look forward to … Read more

Johnson & Johnson’s Pending Split-Up, Talc Liabilities, New CEO Add Complexity to a Once-Clean Dividend Growth Story

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  Image Shown: J&J continues to face legal liabilities due to talcum powder lawsuits. Image Source: Mike Mozart.  By Brian Nelson, CFA Johnson & Johnson’s (JNJ) dividend growth story has become much more complicated in recent years. On a price-only basis, shares of the consumer and pharma giant haven’t been nearly as impressive as that of technology names, but the company still has put up a nice 45% price-only return the past five years, further bolstered by a continuous stream of quarterly dividend payments. J&J yields ~2.6% at the time of this writing, and the company reluctantly remains the bedrock of the Dividend Growth Newsletter portfolio, at least for now. The Split-Up Before we dig into J&J’s fourth-quarter 2021 results, … 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

Johnson & Johnson Boosts Guidance Again, Posts Great Earnings Update

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Image Shown: Johnson & Johnson reported strong performance across its three core business operating segments in the third quarter of fiscal 2021. Image Source: Johnson & Johnson – Third Quarter of Fiscal 2021 IR Earnings Presentation By Callum Turcan On October 19, Johnson & Johnson (JNJ) reported third quarter earnings for fiscal 2021 (period ended around the end of September 2021) that missed consensus top-line estimates but beat consensus bottom-line estimates. The healthcare giant also raised its full-year guidance (again) for fiscal 2021 as its ‘Pharmaceutical’ segment is growing at a robust pace, its ‘Medical Device’ segment is steadily recovering from the worst of the coronavirus (‘COVID-19’) pandemic, and its ‘Consumer Health’ segment is holding up well. We continue to … Read more

Microsoft’s Dividend Is Rock Solid But Why?

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Image Shown: Valuentum’s Dividend Report on Microsoft. The Dividend Cushion Ratio Deconstruction reveals the numerator and denominator of the Dividend Cushion ratio for Microsoft. At the core, the larger the numerator, or the healthier a company’s balance sheet and future free cash flow generation, relative to the denominator, or a company’s cash dividend obligations, the more durable the dividend. In the context of the Dividend Cushion ratio, Microsoft’s numerator is larger than its denominator suggesting strong dividend coverage in the future. The Dividend Cushion Ratio Deconstruction image puts sources of free cash in the context of financial obligations next to expected cash dividend payments over the next 5 years on a side-by-side comparison. Because the Dividend Cushion ratio and many … Read more

Johnson & Johnson Beats Estimates, Raises Guidance Once Again

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Image Source: Johnson & Johnson – Second Quarter of 2021 IR Earnings Presentation By Callum Turcan On July 21, Johnson & Johnson (JNJ) reported second-quarter 2021 earnings that beat both consensus top- and bottom-line estimates. The company (once again) boosted its full-year guidance in conjunction with its latest earnings update as Johnson & Johnson’s business is steadily rebounding from the worst of the coronavirus (‘COVID-19’) pandemic, with an eye towards the ongoing recovery in the sales of its medical devices and related offerings. We include shares of JNJ as an idea in both the Best Ideas Newsletter and Dividend Growth Newsletter portfolios. Its latest earnings report and guidance boost reinforced our favorable view towards the name. Shares of JNJ yield … 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