META

Nelson: I Have Been Wrong About the Prospect of Near-Term Inflationary-Driven Earnings Tailwinds

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Transcript During the past several weeks, we’ve grown increasingly concerned about the health of consumer-tied entities across not only the consumer staples but also the consumer discretionary spaces. Many consumer staples entities, while raising prices, aren’t raising them fast enough to drive operating-income and bottom-line expansion, while many consumer-discretionary companies are facing higher freight and logistics costs and weaker performance in China, perhaps best revealed by Nike’s most recently-reported quarter, where inventory advanced 23% compared to the prior-year period. The tell-tale sign about the health of the consumer may be Amazon (AMZN) Prime Day, which is coming up on July 12-13, but based on many of the reports we’ve monitored this past earnings season, even if sales are strong on … Read more

Valuentum’s Dividend Growth Strategy ‘Outperforming’

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Image: The Valuentum Dividend Growth strategy has delivered thus far in 2022. With the S&P 500, as measured by the SPY, down 18.1% (negative 18.1%) thus far in 2022 and the S&P Dividend ETF (SDY) down 6.7% (negative 6.7%), the Valuentum dividend growth strategy, as measured by the hypothetical performance of the Dividend Growth Newsletter portfolio (as shown above), is down an estimated 4.6% (negative 4.6%) so far in 2022, all on a price-only basis. Though two percentage points better than the S&P High Yield Dividend Dividend Aristocrats Index doesn’t seem like much, the large cap tilt of the simulated Dividend Growth Newsletter portfolio makes such “outperformance” significant and material. The benefits of a dividend growth strategy, in general, have also … Read more

The Stock Market Is Nearing Technical Support Levels

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Image: This year has been a difficult one for equity investors, but the selling pressure that has been common in the markets may start to slow as broader indices such as the S&P 500 begin to approach technical support levels. On the S&P 500, we think there is substantial technical support in the 3,200-3,500 range, which to us suggests that further near-term downside may be limited. The S&P 500 closed at 3,674.84 on Friday, June 17, and we think fair value is much higher. By Brian Nelson, CFA  It’s been difficult to watch the stock market give up much of the gains reaped over the past year or so during the selling barrage that has occurred thus far in 2022. … Read more

Three Growth Stocks That Offer Tremendous Value!

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Image: Some of the most attractive stocks on the market have both growth and value characteristics. By Brian Nelson, CFA As the market struggles to find a near term bottom, three of our favorite ideas are on sale. Meta and Alphabet are dirt cheap, in our view, while Microsoft has tremendous dividend growth prospects. We expect these three names to bounce back considerably once economic uncertainty subsides. Meta Platforms Meta Platfoms (META), formerly Facebook, has a portfolio of properties the world simply cannot do without, and the network effect that emanates from the nature of its properties creates a sizable competitive advantage where its advertising business model can proliferate, despite heightened competition from TikTok and the like. But for Meta, … Read more

Stocks Up 70%+ Since COVID-19 Pandemic Bottom, Best Ideas Outperforming So Far in 2022

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Image Source: Mike Cohen By Brian Nelson, CFA Investors are building in near worst-case scenarios for future free cash flow expectations across our coverage universe in most cases, and it may not make a lot of sense, in our view, given the resilient nature of the global economy through thick and thin. Within the discounted cash flow model that we use to derive the fair value estimates for companies in our coverage, we apply a 10-year baseline (discount) Treasury rate of 4.5%, which is still meaningfully above the current 10-year Treasury rate that is now hovering around 3.5%. What that means is that there still remains an adequate margin of safety within our analytical framework before we might grow concerned … Read more

Shares of Best Idea Meta Platforms Leap Higher After Stellar Earnings Report!

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Image Shown: Shares of best idea Meta Platforms Inc surged higher by ~18% in afterhours trading on April 27 after its first quarter 2022 earnings report indicated that investor fears over its core business were overblown as its daily active user base posted solid growth in March 2022. By Callum Turcan The company behind Facebook, Instagram, and WhatsApp, Meta Platforms Inc (FB) reported first quarter 2022 earnings on April 27 that missed consensus top-line estimates but smashed past consensus bottom-line estimates. Shares of FB surged higher in the wake of its latest earnings report as the company’s family daily active people (‘DAP’) stood at 2.87 billion in March 2022, up 6% year-over-year, while its Facebook daily active users (‘DAU’) stood … Read more

Weekly: Why We Missed Big on T and FB; Overpriced Staples, Our Call To Action; and More!

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In this Valuentum Weekly, in video form, President of Investment Research Brian Nelson, CFA, explains why Valuentum missed big on T and FB, how volatility on names with huge market caps is spiking recklessly, and why the call to action in the book Value Trap remains as relevant as ever given current incentives. ———- Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not a member? Subscribe today. The first 14 days are free.    Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, BITO, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE. … Read more

The Facebook (Meta Platforms) Thesis Just Got Even More Complicated

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Image: Facebook’s free cash flow generation remains robust. Image Source: Meta Earnings Presentation Q4 2021 By Brian Nelson, CFA We like simple ideas — underpriced investment ideas with moaty characteristics, net cash rich balance sheets, tremendous free cash flow generating potential that are tied to secular growth trends over the long haul. The company formerly known as Facebook, now Meta Platforms (FB), has had all these things going for it, but it is no longer a simple idea. That doesn’t mean we’re abandoning ship, however. No story is perfect. Nevertheless, we’re putting Meta Platform’s fair value estimate under review following its fourth-quarter 2021 results, released February 2, and while we expect shares to still come out underpriced following our model … 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

The Metaverse: Qualcomm Expands Partnership with Microsoft

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Image Source: Qualcomm Inc – November 2021 Investor Day Presentation By Callum Turcan A lot of attention has been directed towards the idea of a metaverse, which in short is an expansive digital universe where users can interact with one another via digital avatars of themselves (or whatever avatar the user prefers). This universe could, in theory, combine the functionality of computers and smartphones with almost every digital platform and application in existence. Users could perform both productivity-related activities (collaborating on work projects, holding team meetings, working with clients) and leisure-related activities (playing games with friends and family, meeting up with distant relatives, watching concerts, other live events, TV shows, and movies) in a seamless fashion. The user would not … Read more