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Brace for More Volatility

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Image shown: The S&P 500 ETF (SPY) since August of last year. The markets have broken through key support levels, and now support has become resistance. Volatility remains heightened since the low-vol ETN blew up in February. This article is the introduction to both the Dividend Growth Newsletter and High Yield Dividend Newsletter, both of which will be released today due to the holiday January 1. By Brian Nelson, CFA Markets are facing big pressure on the trading session January 3. There’s more to the story than rising interest rates. There’s more to the story than the US-China trade war. There’s more to the story than concerns about the political environment. Price-agnostic (indexing and quant) trading, as I outline in … Read more

Valuentum Stock Screeners

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This article was sent to members via email December 29. That email can be accessed at the link that follows this article. By Brian Nelson, CFA Hi everyone, I wanted to provide an update with respect to Valuentum’s stock screeners. We believe our stock screeners are among the most robust when it comes to providing forward-looking data, or data that is important with respect to the investment decision-making process. We publish screens in each of the monthly newsletters, but we also provide a basic weekly screener for download on the left column of the website, “Download Weekly Stock Screener (xls) — login required.”   We also have other products. The more robust DataScreener, for example, is part of the quarterly Financial … Read more

Parting with Altria on News of Stake in JUUL

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Image shown: Altria’s performance during the past couple years. Tobacco giant Altria is working to expand its long-term growth potential away from the secular decline in cigarette volumes via an investment in the leading US e-cigarette company. Unfortunately, we think its large investment in JUUL has put the pace of its dividend growth at risk, and we’re parting with this long-term winner in both simulated newsletter portfolios. We’re also putting Altria’s fair value estimate under review, and we expect to lower it materially in an updated report to be published after the holidays. Technical weakness has also put a damper on our excitement. By Kris Rosemann and Brian Nelson, CFA We’re parting ways in both the simulated Best Ideas Newsletter … Read more

Market Mayhem — Alerts for Members

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During these extremely volatile times, it’s important to stay focused. On December 15, we informed all of our members to “Pay Attention.” Shortly thereafter, we notified members of the potential for a stock market technical breakdown. This morning, we offered a pre-market briefing about the importance of thinking about portfolio protection. For Best Ideas Newsletter and Dividend Growth Newsletter members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=e2406cd6-c113-4344-8731-493f33fc44a4&id=preview For High Yield Dividend Newsletter members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=b3ba530f-38b3-489a-ac96-2961dca89c6b&id=preview For Exclusive members: http://campaign.r20.constantcontact.com/render?preview=true&m=1110817109903&ca=ba6d90c0-4433-48b2-9b8a-aac4ddf9006e&id=preview We’re here for any questions. Please just let us know how we can help! Kind regards, Brian Nelson, CFA  brian@valuentum.com

In The News: Record-Low Smoking Rates, China Steel Demand Concerns, and a New Look GM

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US smoking rates are at all-time lows, and the FDA is pushing to restrict sales of menthol products and flavored e-cigarettes. Meanwhile General Motors has announced an accelerated restructuring plan, and concerns have cropped up regarding steel demand in China. By Kris Rosemann The Centers for Disease Control and Prevention (CDC) estimates that 14% of US adults, or roughly 34.3 million people, smoked cigarettes in 2017, a record low, compared to 15.5% in 2016 and 42.4% in 1965, the first year the figure was tracked. Public health initiatives have clearly played a role in the decline, but the CDC also estimates that 47 million people still use some form of tobacco product. The US Food and Drug Administration (FDA) is … Read more

In The News: Market Volatility, iPhone Unit Concerns, Wildfire Liabilities Piling Up

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Let’s take a look at some top stories from around the markets including headlines in the biotech and tobacco spaces, some household names facing material selling pressure, and the significant impact of massive wildfires in California. By Kris Rosemann Market volatility persists as of the November 12 trading session. Concerns surrounding global trade disputes and a stronger dollar are weighing on investor expectations, and multiple big name companies facing selling pressure only add to less than rosy outlooks. The biotech space (XBI) remains under pressure with future price uncertainty providing a material overhang, and big tobacco is under pressure as a result of the potential for a ban on menthol cigarettes from the FDA. Simulated newsletter portfolio holding Altria (MO) … Read more

In The News: Chemical Margins Tighten, Philip Morris Total Volume Rises, Consolidation in ETFs

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PPG Industries is experiencing notable margin headwinds, international tobacco giant Philip Morris has experienced solid total volume performance in 2018, and Invesco continues its pursuit of a significantly larger ETF business. By Kris Rosemann PPG Industries (PPG), one of our favorite chemicals companies on a fundamental basis, has experienced notable selling pressure in recent weeks as a result of its preliminary third quarter results released October 8. It noted a number of headwinds to its bottom-line, despite selling prices increasing for the sixth consecutive quarter in the third quarter of 2018. Cost inflation was the highest since the “cycle began two years ago,” a reference to the beginning of the rebound in energy resource pricing, a key consideration for chemical … Read more

In the News: Expensive Energy, China’s Trade Surplus and Auto Market, and Big Tobacco Developments

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The IEA is concerned about the impact of rising energy prices on global economic growth, and both it and OPEC have lowered near-term oil demand growth expectations. The impact of the US-China trade dispute continues to be sized up by a number of industries, including automakers, and big tobacco companies may be looking to the cannabis market for future growth as the space remains sensitive to potentially increasing regulations.  By Kris Rosemann US stocks bounced back early in the October 12 trading session thanks in part to encouraging earnings reports from the likes of JPMorgan Chase (JPM) and Citigroup (C) and a slight reversal of the yield curve’s recent flattening move. Simulated Best Idea Newsletter portfolio idea Visa (V) gained … Read more

Yes — Anheuser-Busch’s and Vector Group’s Dividends Aren’t Solid

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Image Source: A-B Inbev A couple other research shops have said that Anheuser-Busch’s and Vector Group’s dividends may be at risk, and we agree. Both of their Dividend Cushion ratios are far below 1, and Anheuser-Busch’s Dividend Cushion ratio is -0.6! Are we expecting a dividend cut tomorrow? No. But we prefer dividend growth ideas that have Dividend Cushion ratios far greater than 1. By Brian Nelson, CFA You have to learn our methodologies to understand what we are talking about. For example, there are volumes of information contained in just one number such as the Dividend Cushion ratio (select links: efficacy rate of approximately 90%, how the Dividend Cushion ratio is calculated). This is partly why we spend so … Read more

In The News: Hurricane Florence, Tariffs and Capital Spending Delays, Kroger and Big Tobacco on the Move

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  Let’s take a look at some of the top stories across the market, including the impact tariffs are having on capital spending plans and bottom lines and recent developments in big tobacco. By Kris Rosemann As Hurricane Florence bears down on the East Coast of the US, risk modeling firm RMS believes US insurers should be bracing for $20 billion in losses. More than 1 million people have been ordered to evacuate the area, and the threat of a combination of storm surge, wind, and inland flooding may prove to be significant as Duke Energy (DUK) estimates 1-3 million customers may be left without power across North and South Carolina. Privately-held Liberty Mutual Insurance and Nationwide Mutual Insurance are … Read more