RHI

Capital Spending a Key Headwind to Broader Markets in 2022

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  The undercurrents of the market in 2022 aren’t as strong as we would like, with the Federal Reserve expected to tighten soon and capital spending expected to increase materially, but we continue to like stocks for the long run and don’t see any reason to make any changes to the newsletter portfolios at this time in light of these observations. By Brian Nelson, CFA One of the biggest themes in 2022 is the amount of money companies will spend in capex (“capital expenditures”). A key reduction to net cash flow from operations to arrive at traditional free cash flow is capital expenditures, and we’re seeing some of the largest companies spend aggressively to the detriment of internal free cash … Read more

Don’t Throw the Baby Out with the Bathwater

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Image: Erica Nicol Takeaways: Junk tech should continue to collapse, but the stylistic area of large cap growth and big cap tech should remain resilient. Moderately elevated levels of inflation coupled with interest rates hovering at all-time lows isn’t a terrible combination. In fact, it’s not bad at all. The markets are digesting the huge gains of the past few years so far in 2022, and the excesses in ARKK funds, crypto, SPACs, and meme stocks are being rid from the system. Our best ideas are “outperforming” the very benchmarks that are outperforming everyone else. The BIN portfolio is down 6.4% and the DGN portfolio is down 3.2% year to date. The SPY is down 7.8%, while the average investor … Read more

Best Idea Korn Ferry Continues to Fire on All Cylinders

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Image Shown: Korn Ferry, an idea in our Best Ideas Newsletter portfolio, reported a strong earnings report on December 8. Image Source: Korn Ferry – Second Quarter of Fiscal 2022 IR Earnings Presentation By Callum Turcan On December 8, the consulting firm Korn Ferry (KFY) reported second-quarter earnings for fiscal 2022 (period ended October 31, 2021) that beat both consensus top- and bottom-line estimates. Strength was seen across the board at its ‘Consulting,’ ‘Digital,’ ‘Executive Search,’ and ‘RPO and Professional Search’ business operating segments which all reported nice fee revenue growth and non-GAAP adjusted EBITDA margin expansion. Please note that RPO stands for recruitment process outsourcing. The company issued guidance for the fiscal third quarter within its latest earnings update … Read more

Hard Work and the Trust That Binds

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Image Source: Terry Johnson By Brian Nelson, CFA We’ll have our traditional Valuentum Weekly email coming out on Sunday, and I’m excited to say our team is putting the finishing touches on our technology industry update, so we’ll have a whole bunch of fresh reports for you to look at Sunday evening/Monday morning. It’s easy to forget how much we’ve been through the past two years. Often, we forget how helpful the warning that markets were going to crash was the weekend before they did on February 22, 2020, “Is a Stock Market Crash Coming? – Coronavirus Update and P/E Ratios,” how we thought dollar-cost-averaging made sense at the bottom in March 2020, and how we went “all-in” in April … Read more

Fastenal’s Latest Earnings Update Indicates US Economic Recovery Continues

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Image Source: Fastenal Company – Third Quarter of 2021 IR Earnings Presentation By Callum Turcan On October 12, Fastenal Company (FAST) reported third quarter 2021 earnings that beat top-line consensus estimates and matched bottom-line consensus estimates. The company’s latest earnings report reinforces our thesis that the US economy is continuing to recover from the worst of the coronavirus (‘COVID-19’) pandemic. In 2020, Fastenal generated over 85% of its total sales in the US. Fastenal provides products and services in the decentralized maintenance, repair & operation (‘MRO’) industry, a space where the company attempts to gain an advantage over distribution by locating its operations as close as possible to the economic point of contract with its customers. Earnings Update Within its … Read more

Best Idea Korn Ferry Posts a Stellar Earnings Update

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Image Shown: Shares of Korn Ferry have surged higher year-to-date, and we see room for additional capital appreciation upside. We added shares of Korn Ferry as an idea to our Best Ideas Newsletter portfolio back in January 2021 and continue to be huge fans of the name. The top end of our fair value estimate range sits at $104 per share of Korn Ferry. By Callum Turcan Organizational consulting firm Korn Ferry (KFY) posted results for its first quarter of fiscal 2022 (period ended July 31, 2021) on September 8 that smashed past consensus top- and bottom-line estimates. Korn Ferry commented in the earnings press release that it had generated record quarterly fee revenue, the source of the lion’s share … Read more

Best Idea Korn Ferry Posts Record Results, Shares Surge

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Image Shown: Korn Ferry posted record fee revenue and diluted EPS performance in the final quarter of fiscal 2021 as its business continued to recover. We include Korn Ferry as an idea in our Best Ideas Newsletter portfolio and continue to be huge fans of the name. Image Source: Korn Ferry – Fourth Quarter of Fiscal 2021 IR Earnings Presentation By Callum Turcan On June 22, the global organizational consulting firm Korn Ferry reported fourth quarter earnings for fiscal 2021 (period ended April 30, 2021) that beat both consensus top- and bottom-line estimates. Shares of KFY surged higher by almost 10% during the normal trading session on June 22 as management provided promising near-term guidance in conjunction with the earnings … Read more

Best Idea Korn Ferry Getting Ready to Post Earnings

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Image Shown: Korn Ferry’s revenue generation mix across business operating segments, geographies, and industries as of the third quarter of fiscal 2021. Image Source: Korn Ferry – Third Quarter of Fiscal 2021 Earnings IR Presentation By Callum Turcan The management consulting firm Korn Ferry (KFY) was added to the Best Ideas Newsletter portfolio on January 12, 2021 (link here) after the firm registered a 9 on the Valuentum Buying Index (‘VBI’). Shares of KFY have increased by 31% since then versus an 11% gain for the S&P 500 (SPY) as of the end of normal trading hours on June 18. The top end of our fair value estimate range sits $79 per share of KFY, well above where shares of … Read more

ICYMI — Video: Exclusive 2020 — Furthering the Financial Discipline

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ICYMI — Video: Exclusive 2020 — Furthering the Financial Discipline — — In this 40+ minute video jam-packed with must-watch content, Valuentum’s President Brian Nelson talks about the Theory of Universal Valuation and how his work is furthering the financial discipline. Learn the pitfalls of factor investing and modern portfolio theory and how the efficient markets hypothesis holds little substance in the wake of COVID-19. He’ll talk about which companies Valuentum likes and why, and which areas he’s avoiding. This and more in Valuentum’s 2020 Exclusive conference call.   Note: This video was originally published August 2, 2020.    To watch the video >>   The Theory of Universal Valuation —– Valuentum members have access to our 16-page stock reports, … Read more

Korn Ferry Leaps Higher Toward Our Fair Value Estimate

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Image Shown: Korn Ferry’s stock has surged since it registered a 9 on the Valuentum Buying Index. The company is also included as a holding in the Best Ideas Newsletter portfolio. Brian Nelson, CFA During the trading session Monday, February 22, Best Ideas Newsletter portfolio holding and 9-rated on the Valuentum Buying Index, Korn Ferry (KFY) jumped nearly 9% thanks to better-than-expected fiscal third-quarter 2021 results. Korn Ferry’s fee revenue advanced 9% on a sequential basis as the global consulting firm hauled in record operating income of $65.2 million, record adjusted EBITDA of $96.7 million, and record net income of $51.3 billion during the three months ended January 31, 2021. Here’s what CEO Gary D. Burnison had to say in … Read more