JNJ

ICYMI — Dividend Growth Strategies Struggle

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Image: A large cap growth ETF (orange) has significantly outperformed an ETF tied to a dividend growth strategy, the SPDR S&P Dividend ETF (SDY), which mirrors the total return performance of the S&P High Yield Dividend Aristocrats Index. — By Brian Nelson, CFA — To no surprise to many members, several dividend growth strategies have faced tremendous pressure during 2020. The Journal recently wrote a piece on the topic, but from our perspective, the problem with many dividend growth strategies is that they tend to be balance-sheet agnostic and pay little attention to traditional free cash flow expectations, focusing only on the yield itself, sometimes dismissing future fundamentals in favor of historical growth trends and the inferior EPS-based dividend payout ratio. — In many dividend-targeted … Read more

Johnson & Johnson Once Again Raises Guidance

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Image Shown: An overview of Johnson & Johnson’s financial performance during the third quarter of fiscal 2020. Image Source: Johnson & Johnson – Third Quarter of Fiscal 2020 IR Earnings Presentation By Callum Turcan On October 13, Johnson & Johnson (JNJ) reported third quarter fiscal 2020 earnings (period ended September 27, 2020) that beat consensus non-GAAP EPS estimates and consensus GAAP revenue estimates, though its GAAP EPS fell short of consensus estimates likely due to turbulence created by the ongoing coronavirus (‘COVID-19’) pandemic. Johnson & Johnson’s GAAP revenues were up 2% year-over-year last fiscal quarter while its GAAP gross margin stayed broadly flat at 66.9%. A sharp reduction in other expenses resulted in Johnson & Johnson’s GAAP net income more … Read more

Great Day in the Markets!

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Image: The Invesco QQQ Trust, an exchange-traded fund based on the NASDAQ 100 index, had a great day during the trading session October 12, as it leads all major indexes on the year.  — By Brian Nelson, CFA — First of all, a warm welcome to our new members. We recently posted a website overview video on our website here, and please be sure to view our stock report walk-through . At Valuentum, we’re financial publishers, so please be sure to read through how many members use our services here. — The trading session October 12 was a sight to see. The Dow Jones Industrial Average advanced 0.88%, the S&P 500 jumped 1.64%, while the NASDAQ powered ahead an incredible 2.56%. As many of our … Read more

Nelson: I’m Not Worried About This Market

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Dear members: — First of all, I wanted to share a heartfelt thank you to all that sent kind words regarding the passing of my brother. My inbox was overflowing with your love and kindness. Len was a great person and my best friend. Without him, I don’t think Valuentum would have come into existence. Your words have been very comforting to me and my family during this difficult time. Thank you again. — With that said, I continue to be bullish on the markets over the long haul. We maintain our view that longer-duration enterprise free cash flows are worth more than they were prior to the COVID-19 market collapse, and valuation adjustments are being reset higher as a … Read more

Third-Level Thinking and “Keynesian Convergence”

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Image: The analytical process of the Valuentum Buying Index rating system.  By Brian Nelson, CFA In the 2011 book, The Most Important Thing, co-founder of asset management firm Oaktree Capital Management, Howard Marks, divided stock market analytics into two levels of thinking, first-level and second-level. Marks used a few examples to explain the difference between these two levels of thinking: First-level thinking says, “It’s a good company; let’s buy the stock.” Second level thinking says, “It’s a good company, but everyone thinks it’s a great company, and it’s not. So the stock’s overrated and overpriced; let’s sell.” First-level thinking says, “The outlook calls for low growth and rising inflation. Let’s dump our stocks.” Second-level thinking says, “The outlook stinks, but … Read more

Update on Johnson & Johnson

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Image Shown: An overview of Johnson & Johnson’s expectations for fiscal 2021 provided during its second quarter of fiscal 2020 earnings report. We continue to like shares of Johnson & Johnson as a top-weighted holding in our Dividend Growth Newsletter portfolio. Image Source: Johnson & Johnson – Second Quarter of Fiscal 2020 Earnings IR Presentation By Callum Turcan Johnson & Johnson (JNJ) is a top-weighted holding in our Dividend Growth Newsletter portfolio, and we continue to be big fans of the healthcare and consumer staples giant. The company recently published some key updates that we wanted to draw our members’ attention towards. Before we begin, please note that Johnson & Johnson is near the front of the pack when it … Read more

Dividend Growth Selection in a Low Yield Environment

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Dear members: — John Burr Williams’ historical work The Theory of Investment Value, published in 1938, set the foundation for the widely known discounting mechanism inherent within equity valuation frameworks today. His text is often credited with the origins of the dividend discount model. Though Value Trap: Theory of Universal Valuation identifies enterprise valuation, or the discounted cash flow model (the free cash flow to the firm model, to be precise) as the causal driver of values and prices, the concepts are very similar. Stock values and prices are a function of future expectations. — Today, with highly accommodative Fed and Treasury policy, interest rates are ultra-low, and even yields on junk-rated debt have plummeted. For example, Ball Corp (BLL), a junk-rated credit (jargon … Read more

3 Lessons in Portfolio Management Over 10 Years

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Dear members: — We’re finally getting a pause in the rapid ascent of the markets on September 3rd. Though headlines may look scary and momentum/volatility investors could start to pile on to the downside, a modest retracement is actually a good thing. We continue to focus on the long haul with our processes, and we’re viewing the sell-off as profit taking, for the most part. — In the near term, the markets will also have to digest some speculators betting on mean reversion between “value” (cyclical) versus “growth” (secular), but we maintain the view that the value-versus-growth conversation is largely nonsense (see block quotes below), and mean reversion is something akin to the gamblers’ fallacy, in my humble opinion. Investors should also continue … Read more

The Merits of Concentrated Portfolios

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My dear friends: — Many thanks for your continued interest in our work.  — Though uncertainty in the efficacy of any vaccine for coronavirus disease (“COVID-19”) remains, the New York Times reported today that the CDC “has notified public health officials in all 50 states and five large cities to prepare to distribute a coronavirus vaccine to health care workers and other high-risk groups as soon as late October or early November,” just weeks from now.  — While expected by the optimists, we continue to view this as good news. The sheer amount of resources, both public and private, seeking a vaccine for COVID-19 leads me to believe we’ll have one sooner than later, in time to set the economy up for a stronger-than-expected … Read more

Valuentum Website Overview

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Overview of the key features of valuentum.com/ (03:55). Valuentum (val∙u∙n∙tum) [val-yoo-en-tuh-m] Securities Inc. is an independent investment research publisher, offering premium equity reports, dividend reports, and ETF reports, as well as commentary across all sectors/companies, a Best Ideas Newsletter (spanning market caps, asset classes), a Dividend Growth Newsletter, modeling tools/products, and more. Independence and integrity remain our core, and we strive to be a champion of the investor. Valuentum is based in the Chicagoland area. Valuentum is not a money manager, broker, or financial advisor. Valuentum is a publisher of financial information. The Benefits of Premium Membership >> Subscribe Now!