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Resetting Your Mental Model

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Image Source: affen ajlfe A version of this article was originally published on our website October 6, 2013. Having the right mental model and using the right information can be the reason why you win or lose in investing. “What is the definition of timeliness? Many believe it is getting information to investors as quickly as possible after an event, or updating something every single day or week for immaterial information. I believe in a different definition of timeliness. I believe timeliness is using all information available in a mosaic approach to accurately predict the event before it even happens. Take Kinder Morgan as the latest example. We were the only ones predicting what was going to happen before it did. To investors, … Read more

Owens-Illinois’ Debt Load Is Daunting, We Are Staying Away From This Value Trap

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Image Source: Owens-Illinois Inc – IR Presentation By Callum Turcan Owens-Illinois Inc (OI) is a global manufacturer of glass packaging products, and we see the firm as a major beneficiary of the shift in consumer preferences towards non-plastic packaging options for health and environmental reasons. As of this writing, shares of OI yield 1.9% on a forward-looking basis after management initiated a new dividend policy that saw common quarterly payouts commence in 2019. While Owens-Illinois’ share price below $11/share, as it is at the time of this writing, appears cheap at first glance because shares are trading at a steep discount to our $17 per share fair value estimate, we caution that its technicals are telling another story. Investors were … 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

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

Constellation Sets Optimistic Tone, Outlines Cannabis Opportunity

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Image Source: Constellation Brands The producer of beer, wine and spirits reported excellent second quarter fiscal 2019 results and described cannabis as a “once-a-century disruptive market transition.” Without a doubt, the opportunity in cannabis looks tremendous, but the landscape is fast-evolving. We think Constellation will be a long-term winner in the space, but outsize profits in cannabis may be tough to come by initially. By Brian Nelson, CFA Constellation Brands (STZ) reported solid second quarter fiscal 2019 results October 4 that showed a very healthy and growing business. Net sales advanced 10%, while operating income increased 9% on a comparable basis. The company raised its fiscal 2019 earnings per share outlook to $14.10-$14.25 on a reported basis (was $11.47 in … Read more

Valuentum’s Weighted Average Cost of Capital (WACC) Distribution

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The weighted average cost of capital is one of the most subjective measures in corporate finance, but it is also one of the most important ones. “The most important item over time in valuation is obviously interest rates…If interest rates are destined to be at low levels…It makes any stream of earnings from investments worth more money. The bogey is always what government bonds yield….Any investment is worth all the cash you’re going to get out between now and judgment day discounted back. The discounting back is affected by whether you choose interests rates like those of Japan or interest rates like those we had in 1982…When we had 15 percent short-term rates in 1982, it was silly to pay … Read more

Study: Valuentum’s Best Ideas Newsletter Portfolio

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To read the study, please click on the image to download the pdf document (pdf).

Best Ideas: Reiterating ~$240 Fair Value on Facebook; Adding Chipotle

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We couldn’t be more pleased with Facebook’s first-quarter 2018 results, and we are reiterating our ~$240 per-share fair value estimate on the company. We’re also adding Chipotle as an idea to the simulated Best Ideas Newsletter portfolio, and we’re putting three other speculative considerations on your radar. By Brian Nelson, CFA Facebook (FB) seems to be back in the driver’s seat. We never thought it was out of the race, but many may have thought the negative press would do its shares in … permanently. Not the case. Facebook’s first-quarter 2018 results were fantastic, adding to other strong reports from core simulated Best Ideas Newsletter portfolio ideas, “A Trifecta of Good Reports: Visa, Facebook, PayPal.” Shares of Facebook still look … Read more

ICYMI: Valuentum’s Improved Stock and ETF Web Pages

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Valuentum has rolled out improved stock and ETF web pages on its website valuentum.com/. Now, subscribers can access key proprietary information on the stock and ETF web pages in addition to the customary stock and ETF reports. Dear reader, We have some exciting news that we can’t wait to share with you! At valuentum.com/, we have rolled out new stock and ETF pages that conveniently include a variety of our proprietary metrics from the Dividend Cushion ratio to the Economic Castle rating and beyond! There’s even mouseover functionality so you can learn about how we define the key metrics across our stock-selection and dividend growth methodologies. You’ll still have access to the stock and dividend reports on the landing pages, … Read more

Trump Targets China with Tariffs

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Image: Shanghai, China (December 2016), Andrey Filippov Stock markets in the US are slowly building in the prospect of retaliation (a “trade war”) from China, as a result of President Trump’s new tariffs. We maintain our view that the stock market has been frothy for some time, and the recent volatility may just be the beginning of a reversion to normalized valuations, with or without concerns about global trade. By Brian Nelson, CFA The market may be using concerns about a “trade war” as a reason to sell overpriced stock. According to Factset, as of March 16, the forward 12-month price-to-earnings ratio for the S&P 500 is still over 17 times, one turn more than the 5-year average and nearly … Read more