MSFT

Are Corporate Credit Ratings Really Useful?

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Image Source: Simon Cunningham  There is no way… hold on, let me start over. There is absolutely no way that a company whose primary product price can fall 50% or more in a couple months is a pristine AAA-rated credit. It makes little sense. Having evaluated the credits of hundreds of companies spanning all sectors and industries, you’re never going to convince me that such a business model is worthy of a coveted AAA credit rating. Never. This week, Standard & Poor’s (MHFI) reiterated Exxon Mobil’s (XOM) AAA rating, as if the conditions that shellacked the energy markets the past 6 months simply do not apply to Exxon. Instead, the rating agency opted to lower the firm’s liquidity rating from … Read more

The Invincible S&P 500?

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This is the performance of the S&P 500 (SPY) since the March 2009 panic bottom. It’s incredible, to say the least. US stocks, as measured by the S&P 500 have more than tripled since the doldrums of the Financial Crisis, and for those of us that lived and breathed the markets during every day of the Financial Crisis, the lack of volatility and the ongoing, steady advance seemingly month after month during the past 6-plus years have been incredibly peculiar–and perhaps contradictorily–less-than-comforting. Any market that sets prices on the buying and selling behavior of a wide-variety of participants with differing views shouldn’t be so coordinated and one directional. It seems unnatural, or at the very least, unusual. While others are … Read more

Top Weighted Dividend Growth Newsletter Portfolio Holding Leaps!

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We’ve pounded the table time and time again on Dividend Growth Newsletter portfolio holding Microsoft (MSFT), and shares are surging today on the back of a strong calendar first-quarter report. We are asked quite a bit about how our service differs from others’. Though we’d like to point to our experience and judgment as key considerations, perhaps the most direct answer that speaks to the efficacy of our research, analysis and process rests in our hit rate (the percentage of newsletter portfolio ideas that outperform), which is second to no one. If you’ve read anything about our dividend growth process, it should be no suprise that we expect Microsoft to be a dividend behemoth for decades to come due to its … Read more

Things for Your Radar Tuesday

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Hearing that: Windows 10 launch will be at the end of July. Positive for Microsoft (MSFT). Teva Pharma (TEVA) and Mylan (MYL) looking to tie the knot. Teva getting a nice bounce. IBM’s (IBM) top-line still weak. No interest in shares. Big Blue is not the blue chip equity it once was. Legacy Reserves (LGCY) cuts dividend. No surprise here. We’ve been expecting this for some time. Under Armour (UA) is too rich for our taste. Shares are off after first-quarter report. Rio Tinto (RIO) sees sharp drop in first-quarter iron ore shipments. We’re not interested in adding. ITW (ITW) suffering from guidance cut. Industrial bellwether supporting case that the industrial economy is slowing a tad. Hasbro (HAS) has a … Read more

Intel Looks to Mobile to Overcome PC Weakness

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Intel (INTC) reduced its revenue guidance March 12, dropping expectations for the first quarter to $12.8 billion from $13.7 billion. The world’s largest semiconductor chip maker pointed to weaker-than-expected PC demand, as well as lower inventory levels in the PC supply chain. As far as Intel is concerned, management cited a lack of Windows XP refreshes from small and medium businesses, along with worsening macroeconomic conditions and currency headwinds as main factors in the decline.  Despite the reduction in revenue guidance, the mid-point gross margin expectations remain at ~60% for the period due to higher average selling prices offsetting any profit deleveraging caused by the lower expected volume of PC sales. The firm’s R&D and MG&A spending and depreciation expectations … Read more

Big Buy Backs from Two Dividend Growth Portfolio Holdings

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Triple-A rated Microsoft and Hasbro are turning up the gears in buying back stock. Following what can best be described as a difficult quarter, Microsoft (MSFT) is stepping up its game in buying back its own undervalued stock. Before the end of 2016, the software giant plans to put to work the $31 billion remaining on its share repurchase program. To help it do so, the company is selling $7+ billion in debt, and the timing couldn’t be better. Shares of Microsoft are hovering just over $40 each, and with our fair value pegged in the mid-$50s, levering up the company via buying its own underpriced stock makes a lot of sense. The financial team at Microsoft is creating significant … Read more

There’s More Rough Sledding Ahead; Removing Half of Microsoft from DG Portfolio

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Reverberations of the collapse in commodity prices have influenced much more than the commodity producers themselves. The slide has impacted business in a variety of sectors, almost across the board, as suppliers and customers seemed to pause to assess the damage and opportunities. The strengthening dollar is also having an unprecedented impact on the growth of global entities. If the disappointments yesterday (see here) didn’t signal an inflection point in the markets, then today surely has. It was just yesterday that we reiterated our view that Peabody Energy’s (BTU) dividend was at risk, and almost on cue, the firm announced today that it would slash its payout more than 97%, to $0.085 per share on a quarterly basis. The Dividend … Read more

4 Opportunistic Stocks To Consider Buying in 2015

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The Valuentum Buying Index (VBI) is a philosophy that considers the valuation of a company and the likelihood that a company’s stock will converge to a cash-flow derived fair value estimate. The VBI accepts the view that value is based on the sum of a company’s future expected discounted free cash flows and the excess cash on its balance sheet, while acknowledging that market participants must eventually agree with a firm’s underpricing (and buy the stock) in order to drive the stock’s price to fair value. An underpriced stock with no buying support is not poised to generate good returns, nor is an overpriced stock with good momentum as it will eventually succumb to panic selling once euphoria fades. Stocks … Read more

Stocks Catapult Back To Near All-Time Highs

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It appears that we may get a Santa Claus rally after all. Call it window dressing. Call it drinking at the Fed’s punch bowl. Call it what you will. But the Dow Jones Industrial Average (DIA) polished off its biggest two-day gain in six years to propel itself back to near all-time highs again. The S&P 500 (SPY), shown above, is now within throwing distance of setting new record ground, and spirits remain high as we approach the Christmas holiday and New Year. Collapsing prices at the gas pump, though highlighting risks to global economic growth, may be helping to spread the holiday cheer. For clarification, we continue to be optimistic about the future returns in the newsletter portfolios, but … Read more