NVCR

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

Best Idea Vertex Pharma Outperforming in 2022

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Image Shown: Shares of Vertex Pharmaceuticals Inc, an idea included in our Best Ideas Newsletter portfolio, have performed incredibly well year-to-date through October 2022. By Callum Turcan Through the end of normal trading hours on October 7, shares of Vertex Pharmaceuticals Inc (VRTX) are up ~34% year-to-date on a price-only basis. We include shares of Vertex Pharma as an idea in the simulated Best Ideas Newsletter portfolio and remain huge fans of the name. Vertex Pharma’s commercialized drug portfolio consists of various treatments for cystic fibrosis (‘CF’) and the cash flows generated from sales of these therapeutics are used to invest in the biotech company’s robust drug development pipeline. Earnings and Guidance Update On August 4, Vertex Pharma reported second … Read more

Large Cap Growth Has More Room To Run

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“The stylistic area of large cap growth has been one of our favorite areas because of the strong net cash rich, free cash flow generating, secular growth powerhouses that make up much of the space. The image is a rundown of the key Valuentum statistics for the top 15 holdings of the Schwab U.S. Large Cap Growth ETF (SCHG). We believe where large cap growth goes, so does the broader market, considering the hefty weightings of some of these stocks in other broad-based indices. Based on the high end of our fair value estimate range for this group of bellwethers, the broader U.S. markets still have room to run, to the tune of 7%+, despite the many highs already reached … Read more

With Net Debt and Trading at 40x 2021 Earnings, Mettler-Toledo Is Too Pricey

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Image Source: Metler-Toledo By Callum Turcan and Brian Nelson, CFA On November 9, we increased our fair value estimate for shares of Mettler-Toledo International Inc (MTD) by a significant margin. Though our updated fair value estimate for shares is $870 each, MTD is trading at ~$1,190 at this time, well north of even the high end of our new fair value estimate range (~$1,040). We expect Mettler-Toledo to post greater than expected revenue growth and operating margin expansion over the coming years, which underpins our increased free cash flow growth forecasts for the firm from our prior valuation assessment, but shares still seem way to pricey even after the fair value estimate increase. Mettler-Toledo manufacturers precision instruments used in laboratories, … Read more

An Overview on Valuing Junior Biotech Companies — Does Clovis Fit the Bill?

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The biotech industry remains one of the most fascinating yet perplexing industries for investors. Anecdotes of the entry-stage biotech with a home-run new therapy are often romanticized, but the reality is the vast majority of molecules fail in various stages of clinical testing.  Due to the boom-bust nature of the industry, many are wary of investing in the space, and traditional valuation metrics are not as useful due to a large number of such speculative entities being in the pre-revenue stage. With this in mind, let’s take a glimpse into our thought process when evaluating upstart biotech companies. By Alexander J. Poulos Before we dig in, we feel a word of caution is warranted. Entry-stage biotechs (IBB) inherently come with … Read more

Best in Biotech? Global Blood Therapeutics’ Promising Treatment for Sickle Cell Anemia

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We remain impressed with the depth of research conducted over a wide host of disease states. Though a molecule may appear to hold significant promise in the pre-clinical phase, we have often witnessed the unique ability of the human body to react to various treatments. Often an unwanted side effect can torpedo a treatment, thus relegating millions of dollars of research obsolete. However, if a promising molecule is brought to market, the payoff is often well worth the effort. Our goal is to sift through the various clinical data to unearth the most promising treatments with the understanding that nothing is assured until the FDA authorizes the product for marketing in the US. We believe we have identified a promising … Read more

Which Mid-Stage Biotech Can Grow Into the Next Large Cap Biotech Behemoth?

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Image Source: Steven Depolo The biotech field is on the cutting edge of scientific research. The production of new therapies often positively affects the share price of these innovative companies as long-term revenue and earnings expectations become embedded in the stock price. Let’s take a look at several mid-stage biotechs that may grow into dominant players. By Alexander J. Poulos The application of ETFs in investment strategies has gained widespread adoption during the past decade. Though the blind use of ETFs—buying a basket of stocks at any price—comes with myriad risks, there are certain advantages in that some ETFs offer desired exposure to certain themes or sectors. When it comes to biotech, the most liquid biotech ETF is the iShares Nasdaq … Read more

Stock Market Outlook for 2021

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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