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The Valuentum Buying Index’s Flow Chart

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Image: The Valuentum Buying Index (VBI) flow chart. Each stock in our general operating coverage receives a systematically-applied rating. The VBI should never be used by itself. By Brian Nelson, CFA We witnessed some solid second-quarter reports from Alphabet (GOOG) (GOOGL) and Microsoft (MSFT) after the close July 27, and Facebook (FB) is trading higher in sympathy with Alphabet’s blockbuster report. We maintain our view that big cap tech and large cap growth are the areas to be, and today, we’re pounding the table on our $3,500 fair value estimate of Alphabet. Note, we raised Alphabet’s fair value estimate yesterday, and as is customary with our update cycle, the tables on the stock web page will be refreshed with updated … Read more

The Valuentum Buying Index as a Differentiating Factor

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“No other research provider has approached mapping the market in this manner, making Valuentum’s research a differentiating factor behind your practice and a must-have for any investor.” — Brian Nelson, CFA  By Brian Nelson, CFA We have a huge day of earnings coming out today, and we’re excited about the upcoming releases at Apple (AAPL), Alphabet (GOOG) (GOOGL) and Microsoft (MSFT) after the close. Facebook (FB) is scheduled to report after the market close tomorrow, July 28. The important consideration, however, is how these reports impact our long-term forecasts, and we won’t be reading much into their share-price reaction to the reports, whether good or bad. Valuentum stock reports for Apple here (pdf), Facebook here (pdf), Alphabet here (pdf), PayPal … Read more

Chinese Stocks Getting Hammered

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Image shown: A confluence of factors are driving Chinese stocks lower, not the least of which is heightened regulatory concerns. By Brian Nelson, CFA The collapse in Chinese equities (FXI) (MCHI) during the trading session July 26 is a reminder (again) why you should consider combining momentum with *enterprise valuation* in stocks, as in the Valuentum process. It’s not enough for you to think a stock is undervalued or cheap. The market must agree with you, too. A falling stock price says the market disagrees. Our favorite ideas for consideration are always in the newsletter portfolios, whether the Best Ideas Newsletter portfolio, Dividend Growth Newsletter portfolio, or High Yield Dividend Newsletter portfolio. We do not have any direct exposure to … Read more

Best Ideas Newsletter Portfolio Soars!

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Image shown: The top weighted ideas in the Best Ideas Newsletter portfolio continued to lead the charge during the trading session Friday, July 23. Facebook and Alphabet rallied on favorable reports from social media peers, while Vertex continues to recover thanks in part to encouraging views on CRISPR technology, while Visa looks to be back on track. DPZ had a strong trading session July 22 and experienced some profit taking. Image source: Seeking Alpha.  By Brian Nelson, CFA Add options commentary to your membership >> During the trading session July 23, shares of top-weighted Facebook (FB) surged 5.3%, to close at $369.79. In December 2018, Facebook’s shares were trading hands in the mid-$120s, and the past few years have been … Read more

Netflix’s Free Cash Flow Remains Poor While Competition Is Intensifying

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Image shown: Netflix continues to experience robust growth and improvements in its operating margin, but free cash flow remains weak. Image source: Netflix’s second-quarter earnings shareholder letter. By Brian Nelson, CFA We’re okay with watching Netflix (NFLX) from the sidelines. The company has been lumped in with other companies such as Facebook (FB), Apple (AAPL), and Alphabet (GOOG) (GOOGL) as a “FANG” stock, but the economics of Netflix’s business is quite different than this “peer” group, while the competition is considerably more intense. During the past 52 weeks, shares of Netflix are roughly flat compared to a market that is up over 30%, as measured by the SPDR S&P 500 Trust ETF (SPY). While Facebook, Apple and Alphabet continue to … Read more

Best Idea Facebook Soars!

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Image Shown: Facebook’s shares soared during the trading session June 28 as the company received a favorable ruling regarding a couple complaints that tried to make the case it is operating as a monopoly. By Brian Nelson, CFA On June 28, a federal judge ruled that a couple antitrust cases lacked legal merit in their attempt to peg Facebook (FB) as a monopoly. We view the development positively, and while there is a possibility that amended arguments could be filed, Facebook’s shares remain cheap whether it is preserved in current form or whether the market is forced to value it on a sum of the parts basis. Shares of Facebook soared to $355+ on the news, and our fair value … Read more

Top Ideas Doing Great

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Image Source: Aguayo Samuel By Brian Nelson, CFA Hi everyone: Hope you’re doing great. The S&P 500 (SPY) continues to roar higher. No longer is the market as easy of a call when we pounded the table near the bottom in April 2020, but we remain bullish on the backdrop. The economy remains very healthy, borrowing rates remain near all-time lows, and widespread interest in equities remains elevated given the paltry yields on alternatives such as investment-grade bonds. We continue to let our winners run, though we remain vigilant in protecting the downside. Quietly, the two top holdings in the Best Ideas Newsletter portfolio, Alphabet (GOOG) and Facebook (FB), have raced to outsized performance during 2021, advancing 43%+ and ~21% … Read more

Best Idea Alphabet on the Move!

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Image Shown: Shares of Alphabet Inc Class C have been on a nice upward climb over the past several months with ample room for additional capital appreciation upside, in our view. We include shares of GOOG as a top-weighted idea in the Best Ideas Newsletter portfolio. By Callum Turcan Companies with real pricing power are well-positioned to navigate headwinds arising from inflation pressures as cost increases can be passed along to the consumer and then some (i.e. price increases above inflation). Many large cap tech firms fit this bill including one of our favorite ideas Alphabet Inc (GOOG) (GOOGL), with an eye towards the pricing strength seen at its enormous digital advertising business. We include shares of Alphabet Class C … 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

Inflation! How to Think About Value Duration

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By Brian Nelson, CFA Investors continue to focus on the prospects of rising inflation expectations, which are impacting Treasury bond yields. The 10-year Treasury note, which is used as the foundation for discount rates within most valuation constructs, now stands at ~1.61%, up meaningfully from the ~0.5% lows set in early August 2020. The Fed/Treasury continue to be highly accommodative, and the growing market capitalization of cryptocurrencies is adding even more “new money” to the system. Investors continue to discount the longer-duration free cash flow profiles of the most speculative technology companies more aggressively. For example, the ARK Innovation ETF (ARKK), which is full of speculative tech names, has fallen to ~$105 per share from a 52-week high of $159.70 … Read more