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The Investment Case for More Gender Diversity

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Image: The Impact Shares’ YWCA Women’s Empowerment ETF (WOMN) has trounced the S&P 500 since inception, while the SPDR SSGA Gender Diversity Index ETF (SHE) has bested the quantitatively-hailed small cap value ETF over the same time period. By Valuentum Analysts There has been a plethora of research over the years regarding the value of diversity on teams, in corporate boardrooms, and across asset management. The CFA Institute defines diversity as “the spectrum of human attributes, perspectives, identities, and backgrounds,” and notes that “the discussion around motivations for pursuing diversity in investment management often revolves around two main areas: ‘the business case for diversity’ (i.e., with more diverse perspectives, business outcomes will improve) and ‘because it is the right thing … Read more

Facebook, PayPal, Apple Earnings Reports and More!

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Image shown: Qualcomm’s chart is looking mighty attractive. By Brian Nelson, CFA We continue to like Facebook (FB), PayPal (PYPL) and Apple (AAPL) as ideas in the Best Ideas Newsletter portfolio following their calendar second-quarter 2021 reports, released recently. Vertex Pharma (VRTX) is our favorite way to play emerging CRISPR technologies through its partnership with CRISPR Therapeutics (CRSP), and we were mighty pleased with Dividend Growth Newsletter portfolio holdings Republic Services (RSG) solid 8% dividend increase and Qualcomm’s (QCOM) impressive momentum. Facebook’s revenue soared 56% in the second quarter, and the company leveraged its operating margin to over 1000 basis points of year-over-year expansion. Both net income and diluted earnings per share more than doubled at the social media giant … Read more

Microsoft’s Dividend Is Rock Solid But Why?

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Image Shown: Valuentum’s Dividend Report on Microsoft. The Dividend Cushion Ratio Deconstruction reveals the numerator and denominator of the Dividend Cushion ratio for Microsoft. At the core, the larger the numerator, or the healthier a company’s balance sheet and future free cash flow generation, relative to the denominator, or a company’s cash dividend obligations, the more durable the dividend. In the context of the Dividend Cushion ratio, Microsoft’s numerator is larger than its denominator suggesting strong dividend coverage in the future. The Dividend Cushion Ratio Deconstruction image puts sources of free cash in the context of financial obligations next to expected cash dividend payments over the next 5 years on a side-by-side comparison. Because the Dividend Cushion ratio and many … Read more

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

10 YEARS OF EXCELLENCE AT VALUENTUM

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Tickerized for the DIA. ———- About Our Name But how, you will ask, does one decide what [stocks are] “attractive”? Most analysts feel they must choose between two approaches customarily thought to be in opposition: “value” and “growth,”…We view that as fuzzy thinking…Growth is always a component of value [and] the very term “value investing” is redundant.                          — Warren Buffett, Berkshire Hathaway annual report, 1992 At Valuentum, we take Buffett’s thoughts one step further. We think the best opportunities arise from an understanding of a variety of investing disciplines in order to identify the most attractive stocks at any given time. Valuentum therefore analyzes each stock across a wide spectrum of philosophies, from deep value through momentum investing. And a combination of the … 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

Two Alerts and Bull Market On!

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By Brian Nelson, CFA It’s very hard not to be bullish on the stock market these days. The prudence exercised by many of the largest companies in the S&P 500 remains unprecedented, in our view. Some of the best companies out there have tremendous balance sheets, as evidenced by huge net cash positions. Perhaps two of our favorite companies, Microsoft (MSFT) and Facebook (FB) are the best examples of this, but Apple (AAPL) still retains quite the large net cash hoard as it works to net-cash breakeven. As we look at the next couple years, most investors will continue to focus on the Fed. We’ve seen this song and dance following the Great Financial Crisis (GFC) that wreaked havoc on … 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

ICYMI: Watch Valuentum’s November 2019 Presentation on ‘Value Trap’ Now!

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Watch Valuentum’s November 2019 Presentation on ‘Value Trap’ Now! — To view the November 2019 presentation of Valuentum’s book, Value Trap, please select the following link to continue: — https://www.youtube.com/watch?v=S-n9o9gYKdE&feature=youtu.be — — The November 2019 presentation to the Los Angeles chapter of the American Association of Individual Investors (AAII) of Valuentum’s President of Investment Research Brian M. Nelson’s new book, Value Trap, covers the pitfalls of valuation multiple analysis, traditional quantitative analysis (e.g., value factor, size factor) and the great contradiction between factor investing and the efficient markets hypothesis.  — The November 2019 presentation shows how enterprise valuation rests at the intersection of behavioral economics, quantitative theory, equity valuation and therefore finance itself. Nelson talks about how enterprise valuation can be used … Read more