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How Some Members Use Valuentum’s Investment Services

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By Brian Nelson, CFA Thank you for your membership to Valuentum. We serve a wide variety of investors, including dividend growth investors, value investors, and pure Valuentum investors, among others. Many different types of investors and professionals use our research and financial analysis in a whole host of applications from individual stock-selection to the evaluation of closed-end funds to an overlay in a money-management setting and beyond. We wanted to make sure that you know that, if you’re a dividend growth or income investor, that there are others that use our website to utilize the Valuentum process, fair value estimates and other metrics. Similarly, if you’re a practitioner of the Valuentum system, I wanted to make sure that you are … Read more

Raising Our Fair Value Estimate of Dividend Aristocrat Caterpillar

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Image: Caterpillar’s financial momentum is impressive. Image Source: Caterpillar By Brian Nelson, CFA We’ve raised our fair value estimate of Caterpillar Inc. (CAT) to $238 per share from $192 previously. As witnessed in Deere & Company’s (DE) fiscal fourth-quarter results, too, Caterpillar is driving considerable pricing expansion across its portfolio, and the impact on its financials has been quite impressive. Though not an idea in any newsletter portfolio, Caterpillar’s shares yield ~2% at the time of this writing, slightly better than the average S&P 500 company. The company is proud to be a Dividend Aristocrat. When Caterpillar reported third-quarter 2022 results back in October, the company recorded a 21% increase in revenue while adjusted profit per share leapt to $3.95 … Read more

South32 Continues to Improve Its Asset Base

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Image Source: South32 – October 2021 Sierra Gorda Acquisition IR Presentation By Callum Turcan South32 (SOUHY) represents one of our favorite ideas in the mining space, and we include shares of SOUHY as an idea in the new ESG Newsletter portfolio (more on that here). We view both South32’s capital appreciation and income generation upside quite favorably, keeping in mind the firm has a variable dividend policy that is subject to foreign currency movements. On a scale of 1-100 (with 100 being the best), South32 earns a nice ESG rating of 93 (based on our proprietary ESG rating matrix) as the miner continues to pivot towards commodities that will be essential to making the green energy revolution possible. Before we … Read more

ICYMI: Valuentum’s Brian Nelson on the Latest Howard Marks’ Memo: “Something of Value”

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Valuentum’s President of Investment Research Brian Michael Nelson, CFA, explains why there are not really value and growth stocks, why most of the research in quantitative finance is spurious and needs to be redefined on a forward-looking basis, and why enterprise valuation (not the efficient markets hypothesis) should be the organizing principle of finance. Nelson explains his views about valuation, what it means to be a value investor, and investing in the context of Oaktree Capital Howard Marks’ latest memo, “Something of Value,” January 11, 2021. Please don’t forget to give the second edition of the book “Value Trap” a 5-star rating on Amazon here. Thank you for your membership! —– Tickerized for holdings in the IWM. Valuentum members have … Read more

Value Is Not Static and the Qualitative Overlay Is Vital to Our Process

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With prudence and care, the Valuentum Buying Index process and its components are carried out. Our analyst team spends most of its time thinking about the intrinsic value of companies within the context of a discounted cash-flow model and evaluating the risk profile of a company’s revenue model. We have checks and balances, too. First, we use a fair value range in our valuation approach as we embrace the very important concept that value is a range and not a point estimate. A relative value overlay as the second pillar helps to add conviction in the discounted cash-flow process, while a technical and momentum overlay seeks to provide confirmation in all of the valuation work. There’s a lot happening behind the scenes even before a VBI rating is published, but it will always be just one factor to consider. Within any process, of course, we value the human, qualitative overlay, which captures a wealth of experience and common sense. We strive to surface our best ideas for members.

Nucor Is One of the Best in a Bad Business

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Image Source: Nucor Corporation – June 2019 IR Presentation By Callum Turcan Steel and steel product producer Nucor Corporation (NUE) bills itself as North America’s largest recycler, using scrap metal at its mills in the US to maintain its status as a low cost producer of anything from steel beams to precision castings. The company has 25-scrap based steel mills that can produce 27 million tons of steel per year. Our fair value estimate for Nucor stands at $53 per share after our recent industry update, and we like the firm’s dividend coverage as well. Shares of NUE yield 2.8% and trade just north of our fair value estimate as of this writing. Strong Free Cash Flows On October 22, … 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

South32 Is a Great Miner

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Image Shown: An overview of South32’s global asset base. We are big fans of the Australian miner. Image Source: South32 – Fiscal 2021 IR Earnings Presentation By Callum Turcan Back in 2015, the mining giant BHP Group Ltd (BHP) spun off South32 (SOUHY). Since then, South32 has seen some major changes to its asset base through a combination of acquisitions, divestments, and organic investments. We include shares of South32’s American depository receipts (‘ADRs’) as an idea in the new ESG Newsletter portfolio (more on that here). Each ADR represents five ordinary shares of South32. South32 is based in Perth, Australia, and we’re huge fans of its pristine balance sheet, stellar free cash flow generating abilities, top-notch asset base, and bright … Read more

Top ESG Idea South32 Getting Closer to Launching Major Mining Project in Arizona

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Image Shown: South32 is targeting ample zinc, lead, and silver resources at the Hermosa project in Arizona that could be quite economical to extract should the Australian-based miner move forward with the endeavor. Image Source: South32 – January 2022 IR Presentation By Callum Turcan Shares of South32 (SOUHY), one of our favorite miners, are up over 50% during the past year as of this writing and that is before taking dividend considerations into account. The Australian miner has a bright outlook after shedding virtually all its thermal coal assets last calendar year (completed in June 2021) and announcing in October 2021 that it would acquire a sizable economic interest in a Chilean copper mine. As a quick housekeeping item, South32’s … Read more

Shares of Our Favorite Miner South32 Skyrocketed During Past Year

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Image Shown: South32, an idea in our ESG Newsletter portfolio and one of our favorite miners, put up tremendous financial performance during the first half of fiscal 2022 as it capitalized on surging realized prices for its commodities sales. Image Source: South32 – First Half of Fiscal 2022 IR Earnings Presentation By Callum Turcan Shares of the American depository receipts (‘ADRs’) of one of our favorite miners, South32 (SOUHY), have put up tremendous performance during the past year. According to data provided by Yahoo! Finance, shares of SOUHY are up over 50% during the past year on a price only basis while the S&P 500 (SPY) is up ~9% on a price only basis during this period as of late … Read more