LOW

Lowe’s Posts Poor Third-Quarter Results; Turnaround Still Quarters Away

by

Home-improvement retailer Lowe’s (LOW) reported poor third-quarter results that revealed over a 45% decline in net earnings, as the big-box retailer continues to be weighed down by store closings and discontinued projects. We’re sticking with our low $20s fair value estimate and are considering widening our margin of safety on the company’s shares given the longer-than-expected turnaround. The firm’s top line expanded 2.3%, while comps nudged up slightly (0.7%) and topped the aggregate performance through the first nine months of the year (-1%). Lowe’s expects this positive same-store-sales trend to continue into the fourth quarter, as management guided for meager expansion (flat to 1%) for the period. Investors should expect increased top-line growth rates in the fourth quarter for Lowes, … Read more

Home Depot Outshines Lowe’s in its Second Quarter

by

Home Depot (HD) reported solid second-quarter results Tuesday that revealed a strong rebound in its seasonal business and strength in its core categories (hardware, building materials, and electrical), despite the sluggish housing recovery. We like the name better than peer Lowe’s (LOW), but don’t feel diving head first into a housing market play is best at this point in the economic recovery. Home Depot’s sales jumped over 4% from the same quarter a year ago on a similar percentage jump in global comps, while earnings per diluted share expanded nearly 20%, a very impressive growth number. Operating income increased 12% and net earnings increased over 14%, so we were quite pleased with Home Depot’s ability to leverage sales expansion in … Read more

Stock Market Outlook for 2021

by

By Valuentum Analysts February 8, 2021 2020 was one for the history books. We covered our thoughts and reflections on the past year in our “2020 Won’t Soon Be Forgotten” article (link here), and now we are looking towards the future. Global health authorities should be able to bring an end to the ongoing coronavirus (‘COVID-19’) pandemic sooner than many had expected as several vaccines have already been improved for emergency use and several others appear increasingly likely to get approved. Global vaccine distribution activities are currently underway, and this should allow the world to slowly return to pre-pandemic activities. Before then, immense stimulus measures launched primarily in developed nations should support global economic activities until the public health crisis … Read more

Which Sectors Are Leading the Market Higher? And Why Is This Important?

by

Missed the ’13 Most Important Steps to Understand the Stock Market’? Click here. Demand academic evidence regarding the efficacy of the Valuentum process? Click here. Tobias J. Moskowitz and Mark Grinblatt documented the “strong and prevalent momentum effect in industry components of stock returns which accounts for much of the individual stock momentum anomaly” in their scholarly article published in the Journal of Finance, ‘Do Industries Explain Momentum’ (download here; stable link here; updated by Fraulo and Nguyen here). Moskowitz and Grinblatt also concluded that “industry momentum investment strategies, which buy stocks from past winning industries and sell stocks from past losing industries, appear highly profitable.” Such findings are consistent with the ‘Case for the Valuentum Style of Investing,’ and … Read more

How to Think About Corporate Tax Reform

by

The Best Years Are Ahead

by

By Brian Nelson, CFA — The wind is at our backs. — The Federal Reserve, Treasury, and regulatory bodies of the U.S. may have no choice but to keep U.S. markets moving higher. The likelihood of the S&P 500 reaching 2,000 ever again seems remote, and I would not be surprised to see 5,000 on the S&P 500 before we see 2,500-3,000, if the latter may be in the cards. The S&P 500 is trading at ~4,100 at the time of this writing. — The high end of our fair value range on the S&P 500 remains just shy of 4,000, but I foresee a massive shift in long-term capital out of traditional bonds into equities this decade (and markets … Read more

8 Announcements and Top Research You May Have Missed

by

8 Announcements. This article was sent to members via email March 27. By Brian Nelson, CFA Hi everyone, Brian here. Trust you are doing great! Here are eight announcements I want you to be aware of: Everything we do is for our members. We’re very proud of the outperformance of the Best Ideas Newsletter portfolio, that we’ve never had a dividend cut in the Dividend Growth Newsletter portfolio, that our high-yield ideas are holding up very well, and the success rates of the Exclusive capital-appreciation ideas and short-idea considerations are running at approximately 80%. We’re proud to be your research partner. The odds of a Fed rate cut are going up as yield-curve inversion continues to threaten. The risks are more behavioral in … Read more

ICYMI — Video: Will Hasty Policy Facilitate the Next Leg Down, or Do We Have It Coming Anyway?

by

President of Investment Research and award-winning author of Value Trap: Theory of Universal Valuation Brian Nelson explains how US policymakers are stuck between a rock and a hard place, and how the market may be factoring in too high of a probability of a return to normalcy before 2021. This and more in the latest video report. Summary Make sure you review Value Trap on Amazon. Do so here. We think those that bought equities near the bottom of this swoon may be looking to take profits at present levels. The market is currently reflecting an 80%-85% probability of a return to normalcy before 2021, which we believe is too high at this time. Our main concern is that government … Read more