PCP

The Time to Consider Owning Alcoa Has Passed

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Image Source: aushiker First-quarter earnings season is already upon us, with aluminum giant Alcoa (AA) kicking things off April 8. If there is one thing investors should know about Alcoa, buying the company’s equity nearly 7 years into an economic recovery is fraught with capital risk. No matter how much Alcoa’s business shifts to value-add from commodity-type metal, core demand will always be cyclical. There were a lot of good numbers in the Alcoa report. Revenue grew 7% thanks to organic expansion in automotive and aerospace, while net income came in at $0.28 per share. After-tax operating income of $191 million was a record for its ‘Engineered Products and Solutions’ division, while the same measure in its ‘Alumina’ segment doubled … Read more

Commercial Aerospace Flying High

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Valuentum’s President Brian Nelson talks about the resiliency of the commercial aircraft making business and the massive backlogs that offer a nice tailwind to the supply chain. Source of Images: Boeing (BA), Randy Tinseth (20-year Current Market Outlook, July 2014). If you cannot see the video, please click here. Aerospace Suppliers: AIR, AIRI, AL, ATRO, COL, HEI, HXL, ISSC, PCP, SPR, TATT, TDY, TXT Airlines – Major: AAL, ALK, DAL, JBLU, LUV, SAVE, UAL

Yes, We Had Removed PCP Before the Fall

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Call it luck. Call it experience. Call it what you will, but we removed Precision Castparts (PCP) from the Best Ideas portfolio in late September at nearly $240 per share, roughly 20% higher than current levels. Now one of our favorite watch list ideas, the metal bender said in a regulatory filing released January 16 that its third-quarter fiscal 2015 results would come in a bit light due primarily to lower demand from the oil and gas end markets. The executive suite also pointed to de-stocking from a single commercial aerospace customer, year-end customer inventory management actions, and an extended equipment upgrade as reasons for why revenue would come in the range of $2.42-$2.47 billion and earnings per share from … Read more

Alcoa Kicks Off Fourth Quarter Earnings Season

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Would we ever considering owning Alcoa (AA) near a cyclical peak in economic demand, roughly 5-7 years into one of the strongest stock-market recoveries in history, or said differently, in the current environment? The short answer is: No. Market veterans know that the time to consider buying Alcoa is at a cyclical trough, not at peaks, and only then if there is no tangible risk of default. Alcoa may not be as much of an economic bellwether as it once was when the US was a much larger manufacturer of goods, but the aluminum giant is still relevant in assessing underlying demand trends in various end markets across the globe. The lightweight metal producer finds its way into just about … Read more

Gearing Up for 2015 Outlooks

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Though the firms below aren’t included in the newsletter portfolios, we keep a close eye on them should an opportunity ever present itself. Not only are they fantastic companies with strong business models, but they also provide insight into the broad industries in which they operate. With only a couple weeks left in 2014, management teams are actively preparing their budgets for 2015. Let’s have a look at what a few bellwethers have been saying about their outlooks for next year. Industrial Bellwether 3M (MMM)  The maker of Post-it notes has become the poster child of aggressive dividend growth policy as of late. Having traditionally raised its dividend a penny or two per year in the past, 3M upped the … Read more

Performance of the Valuentum Buying Index

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Note: A more recent analysis of the Valuentum Buying Index rating system can be accessed at the following link: /Value_and_Momentum_Within_Stocks_Too Two separate studies have reinforced the efficacy of the Valuentum Buying Index, both as a portfolio optimization tool and as an idea generator. If you cannot view the video, please consult the transcript that follows. To view Valuentum’s updated YouTube page, please see here.  The studies referred to in this video can be accessed as follows: Why Valuentum Buying Index Ratings Matter: /20141003_1 Valuentum’s Performance on Seeking Alpha: /20141009 Please be sure to read the studies closely in addition to watching the video or consulting the transcript below. Brian Nelson, CFA: This is Brian Nelson from Valuentum Securities. I’d like to talk … Read more

What Members Are Talking About: Ford, Gilead, and Boeing

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Question #1 October 1, 2014 Brian: I have a quick question for you.  I read last night that Valuentum eliminated Ford (F) from their portfolio.  A few months ago you commented on the strength of Ford’s sales in emerging markets.  You have a range of 15-27 on Ford price using the DCF process.  With F trading currently under the low end of the range, would it still be prudent to sell the position?  I know clients have made gains since your recommendation in your portfolio, but wouldn’t it be more prudent to sell a position that is closer to fair value than one that is trading below its fair value range? If there is an updated report on F, I … Read more

The Correction: Protection Makes Sense

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When our team thinks about members, the one thing we want for them is to make money from our service. This sometimes means that we’re a bit cautious at times. For example, taking profits on Ford (F), Precision Castparts (PCP), and Buffalo Wild Wings (BWLD) a couple days ago was not an easy thing to do. They’ve been huge winners. From a fundamental standpoint, we still like the companies, but market conditions and valuations cannot be ignored. Just like the profit-taking, we also think it was prudent to add protection in the form of put option contracts to the Best Ideas portfolio and Dividend Growth portfolio in light of a number of factors. The put option contracts amount to ~1.5% … Read more