LLY

Brief Note: Just How Good Has Our Stock Selection Been?

by

By Brian Nelson, CFA I was taken aback by a recent report from UBS that outlined “the top contributors to the S&P 500 from about two years ago to today.” In a simulated securities portfolio, the Best Ideas Newsletter portfolio, of 18 ideas that also includes several ETFs, we’ve managed to hit the board 7 out of the 20, and 9 including Exxon Mobil (XOM) and Chevron (CVX), the latter two we removed in March following their big runs last year. Here were the top 20 contributors, with simulated Best Ideas Newsletter portfolio holdings highlighted in red (XOM and CVX are highlighted in green): Nvidia (NVDA), Microsoft (MSFT), Apple (AAPL), Eli Lilly (LLY), Broadcom (AVGO), Exxon Mobil, Berkshire Hathaway (BRK.B), … Read more

There Will Be Volatility

by

By Brian Nelson, CFA Last year, 2022, was a big test for equity investors, and the downside volatility that we witnessed during the year wasn’t comfortable, to say the least. Following the COVID-19 crash and rebound during 2020, and then the market surge in 2021, it wouldn’t be a stretch to say many investors’ heads are probably still spinning from all the volatility witnessed to start this decade. That said, part of what we’ve been warning about the past few years with respect to the equity market, especially in Value Trap, is that the proliferation of price-agnostic trading (e.g. quant, machine/algorithmic trading, etc.) will only lead to more and more market volatility, so while we were somewhat surprised by last … Read more

Investors Likely Overreacting to Long-Run Impact That Weight-Loss Drugs Will Have on Snack and Food Stocks

by

Image: Domino’s stock has slumped recently due to weakening same-store sales expansion and concerns that weight-loss drugs will have on snack and food demand. By Brian Nelson, CFA The American eater continues to fight the “battle of the bulge” as many seek improved lifestyles and the health benefits from losing weight and getting in shape. The healthcare industry is delivering on this front, too, with diabetes drugs from Novo Nordisk (NVO) and Eli Lilly (LLY) called GLP-1 agonists that also have weight-loss benefits. Though we applaud what looks to be a solution in part for the obesity epidemic that has overtaken the U.S., investors are growing concerned that snack and food stocks will see slackening demand. The retail sector, for … Read more

ICYMI: Questions for Valuentum’s Brian Nelson

by

Valuentum’s President Brian Nelson, CFA, answers your questions. Q: What Is Valuentum? A: In short, it is a strategy that combines the concepts of value and momentum within individual stocks. We measure value through the cash-based sources of intrinsic value – net cash on the balance sheet and future expected free cash flow. We measure momentum rather simply, generally via relative strength or other technical and momentum indicators. We like stocks with strong net cash positions on the balance sheet, ones that are generating tremendous free cash flow, and have strong secular growth prospects such that the prospect for expectations of free cash flow can continue to be ratcheted higher. Today, most Valuentum stocks are included in the stylistic area … Read more

Stock Report Updates

by

In our 16-page equity research reports, we offer a fair value estimate for each company based on a rigorous and transparent discounted cash flow process, assess the attractiveness of a stock based on a firm-specific margin of safety, and provide a relative valuation comparison in the context of the company’s industry and peers. Each report includes detailed pro forma financial statements, explicit fundamental forecasts, and scenario analysis. A cross section of the ValueCreation and ValueRisk ratings provides a financial assessment of a company’s business quality (competitive position), while the ValueTrend and Economic Castle ratings offer insight into the trajectory of a firm’s economic profit creation (ROIC versus WACC). Included in each 16-page report is a company’s rating on the Valuentum Buying Index (VBI), a methodology that combines rigorous financial and valuation analysis with … Read more

Latest Report Updates Concentrated in Mining & Chemicals and Healthcare Industries

by

———- In our 16-page equity research reports, we offer a fair value estimate for each company based on a rigorous and transparent discounted cash flow process, assess the attractiveness of a stock based on a firm-specific margin of safety, and provide a relative valuation comparison in the context of the company’s industry and peers. Each report includes detailed pro forma financial statements, explicit fundamental forecasts, and scenario analysis. A cross section of the ValueCreation and ValueRisk ratings provides a financial assessment of a company’s business quality (competitive position), while the ValueTrend and Economic Castle ratings offer insight into the trajectory of a firm’s economic profit creation (ROIC versus WACC). Included in each 16-page report is a company’s rating on the Valuentum Buying Index (VBI), a methodology that combines rigorous financial and valuation analysis … Read more

Our Reports on the Health Care Bellwethers Industry

by

Dividend Yield: Estimated on a forward-looking annualized basis. VBI: The Valuentum Buying Index, a timeliness indicator that overlays a price-to-fair-value estimate consideration. Fair Value Estimate: Derived by Valuentum’s enterprise valuation process. Dividend Cushion ratio: A ratio assessing the health of the dividend (the higher, the better). Data as of the date of this article. Individual company reports may have been updated subsequent to the publishing of this article, so please download a company’s stock and dividend report for its latest information and data. Note: The data in the tables of each of the below companies’ respective stock pages is updated the weekend after the publishing of this update. Please click on a company name below to view the corresponding equity … Read more

UnitedHealth Group Raises Guidance for 2023

by

By Brian Nelson, CFA On April 14, UnitedHealth Group (UNH) reported first-quarter 2023 that beat the consensus estimates on both the top and bottom lines. Revenue advanced 14.7% in the quarter, while non-GAAP earnings per share of $6.26 beat the consensus number by $0.18, increasing from $5.49 per share in the prior-year period. The high end of the fair value estimate range of UnitedHealthGroup stands north of $600 per share, implying considerable valuation upside potential compared to where shares are trading at the time of this writing. Image: We view valuation as a range of probable fair value outcomes. The high end of the fair value estimate range for UnitedHealth Group stands north of $600. Shares are currently trading at … Read more

UnitedHealth Is A Free Cash Flow Powerhouse; Shares Yield ~1.3%

by

Image Source: UnitedHealth Group By Brian Nelson, CFA UnitedHealth Group (UNH) is a holding in the Dividend Growth Newsletter portfolio, and it completed a fantastic 2022 when it reported its fourth-quarter results, released January 13. UnitedHealth Group is a free cash flow generating powerhouse. During 2022, the company hauled in $26.2 billion in cash flow from operations and spent just $2.8 billion on property, equipment, and capitalized software, good enough for $23.4 billion in free cash flow, materially higher than the $5.99 billion it paid in cash dividends over the same time. The Dividend Cushion ratio of UnitedHealth Group is a very healthy 3.5, and our valuation puts the high end of a fair value estimate range for shares of … Read more

Exclusive Call: What To Expect From Valuentum in 2023

by

Video: 2022 was a successful year by almost every measure from the simulated Best Ideas Newsletter portfolio and simulated Dividend Growth Newsletter portfolio to the simulated High Yield Dividend Newsletter portfolio and Exclusive publication and beyond. There were some disappointments in 2022, of course, but the year showed the value of a Valuentum membership. Join President of Investment Research Brian Nelson on this year’s Exclusive conference call to learn what to expect from Valuentum in 2023. Cheers! Transcript President of Investment Research Brian Nelson: Happy Holidays everyone! I hope that you are enjoying this special time of year with family and friends, and I wish you all a wonderful 2023! I just wanted to take a few minutes to recap … Read more