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Net-Cash-Rich, Free-Cash-Flow Generating Powerhouse Salesforce Has a Long Growth Runway

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Image Source: Salesforce By Brian Nelson, CFA On November 29, Salesforce (CRM) reported excellent fiscal third-quarter results and issued an outlook for its fiscal fourth quarter that came in better than expectations. The Dow Jones Industrial Average component’s results were welcome news as the bellwether revealed that spending on cloud-based CRM software remains robust. In the quarter ending October 31, revenue advanced 11% on a year-over-year basis, while non-GAAP diluted earnings per share came in at a solid $2.11. Its outlook was rosier than what the Street was expecting. For the fiscal fourth quarter, the company is targeting non-GAAP earnings per share in the range of $2.25-$2.26 per share, better than the consensus forecast of $2.18. The strong quarter only … Read more

There Will Be Volatility

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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

ICYMI: Questions for Valuentum’s Brian Nelson

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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

Nvidia Rockets Higher to Propel Large Cap Growth

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Image: Nvidia powers higher after releasing better-than-expected second-quarter fiscal 2024 guidance. The company continues to be a driver behind the outperformance of large cap growth as a stylistic area. By Brian Nelson, CFA We haven’t seen a quarterly guidance beat like this since Synaptics (SYNA) put up a monster quarter when Apple (AAPL) started using its innovative click-wheel technology in the first-generation iPod, almost 20 years ago. Nvidia Corp.’s (NVDA) outlook for the second quarter of its fiscal 2024 was phenomenal thanks to tremendous interest in its chips that power artificial intelligence [AI]. We expect a material increase in our fair value estimate of Nvidia, but shares remain quite pricey, in our view. Revenue during Nvidia’s fiscal second quarter is … Read more

Adobe Acrobat Pro Prices Up 33%; Price Tag of Figma Deal Remains Overhang on Shares

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Image: Adobe’s long-term market opportunity is huge. Image Source: Adobe By Brian Nelson, CFA All things considered, fiscal 2022 was a solid year for Adobe (ADBE), as reported in its latest quarterly earnings report December 15. The company generated record revenue, operating income, and operating cash flow, and we loved that management is talking in terms of the “next decade of growth,” not next quarter or even next year. We like executive suites that are positioning their companies for the long run, and we think Chairman and CEO Shantanu Narayen has done a great job leading the charge. Adobe is among the most well-known software companies due in part to its Adobe Acrobat software. Almost anyone that has applied for a job has … Read more

Exclusive Call: What To Expect From Valuentum in 2023

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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

Salesforce Doesn’t Make the Cut for the Newsletter Portfolios

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Image: How we rank our favorite ideas. We’re huge fans of ideas in the simulated newsletter portfolios and Exclusive publication. We like the ideas in the simulated newsletter portfolios and Exclusive publication the best. By Brian Nelson, CFA Salesforce, Inc. (CRM) has never been an idea in the simulated newsletter portfolios since inception, and that’s not going to change anytime soon. Its share price has been roughly cut in half in 2022, and we’re sticking with our $130-$196 per share fair value estimate range following the company’s disappointing outlook for the fourth quarter of fiscal 2023. Weakness across the software space and the exit of co-CEO Bret Taylor and Stewart Butterfield, the head of Salesforce-owned Slack, aren’t reassuring. Risks are … Read more

2022 Showcased the Value of a Valuentum Membership

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In bull markets, almost everyone is a winner. But 2022 was different. This year was a big test for Valuentum, and we passed with flying colors. We delivered across the board during the year from ideas in the Exclusive publication and the efficacy of the dividend growth methodology to the resilience of high yield ideas and simulated Best Ideas Newsletter portfolio relative performance–despite setbacks from Meta Platforms, PayPal, and beyond. Tune in to the latest video installment from Valuentum. Thanks for listening! Tickerized for holdings in the SPY. ——————————————— 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” … Read more

Market Whipsaw: Crypto Collapse and a Lower-than-Expected Inflation Print

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Image: Uncertainty in the cryptocurrency markets has surged with concerns over the liquidity of a key exchange. Investors are weighing the spillover effects of crypto with the view that the pace of inflation may have peaked. — By Brian Nelson, CFA — The U.S. equity market continues to be highly volatile as it whipsaws between concerns over the health and sustainability of cryptocurrency and optimism over lower-than-feared inflation readings. We maintain our bearish/defensive stance on equities, but at the same time, we continue to be “fully-invested” across the simulated newsletter portfolios in part because we don’t want to miss out on days like today, November 10, when the markets are soaring ~2.5%-5.5% depending on which index you are monitoring. We’re also … Read more

Nelson: Executing the Valuentum Strategy

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Video: Valuentum’s President Brian Nelson, CFA, explains why he’s turned bearish on the equity markets after a great bull run. In this 8-minute video, learn about the fantastic returns of the stock market the past three years, and how the Valuentum way has cushioned the market decline in 2022. Watch now to learn about the textbook execution of the Valuentum strategy and more! –——— Tickerized for holdings in the SPY. 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. Some of the other securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact … Read more