SJM

Thinking Slow: 3 Research Blind Spots That Changed the Investment World

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Dear members: — Daniel Kahneman in his text Thinking, Fast and Slow (1) divided the human psyche into two systems. The first system is instinctive and emotional, often set on autopilot, while the second system is slower and more logical, requiring a calculating conscious. Many of the maxims the investment world takes for granted today suffer from conclusions that are made rapidly, almost without thinking, driven by our first system, creating what I call research blind spots. — In World War II, Allied bombing raids were suffering from very high casualty rates. It was estimated that for those pilots that were flying at the beginning of the war, only about 10% survived, a terrible loss rate. Bombing was crucial to the Allied … Read more

Dividend Increases/Decreases for the Week of July 18

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Below we provide a list of firms that raised their dividends during the week ending July 18. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week                          Banco Santander (Brasil) S.A. (BSBR): now $0.0655 per share quarterly dividend, was $0.0463. Bank of New York Mellon (BK): now $0.53 per share quarterly dividend, was $0.47. Citigroup (C): now $0.60 per share quarterly dividend, was $0.56. Community Financial System (CBU): now $0.47 per share quarterly dividend, was $0.46. Cummins (CMI): now $2.00 per share quarterly dividend, was $1.82. Duke Energy (DUK): now $1.065 … Read more

J.M. Smucker Sets Fiscal 2026 Earnings Outlook Below Consensus

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Image: J.M. Smucker’s shares have been under pressure of late. By Brian Nelson, CFA J.M. Smucker (SJM) recently reported fourth quarter fiscal 2025 results with revenue missing the mark, while non-GAAP earnings per share beat expectations. In the quarter, net sales for the quarter excluding divestitures and foreign currency exchange fell 1%, while adjusted earnings per share came in at $2.31, better than $2.25 consensus but representing a decline of 13% versus the same period a year ago. Cash provided by operations for the quarter was $393.9 million compared to $428.1 million in the prior-year period. Free cash flow was $298.9 million for the quarter. Management had the following to say about the results: Our fourth quarter and full-year results … Read more

3 Undervalued Stocks to Consider Buying Now

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Dear readers:   With the markets retracing most of their recent drawdown, we’re taking a victory lap as we didn’t panic, nor should have you. We highlighted our wait-and-see approach amidst the worst of the pullback, and we expect the Magnificent 7 (large cap growth and big cap tech) to continue to propel the markets higher, as they have done.   We’ve been busy rolling valuation models as we finetune our assumptions for a great number of companies under coverage. While doing so, we came across three undervalued stocks that are also included in the simulated newsletter portfolios. We think they’re prime for highlight.   The three stocks are UnitedHealth Group (UNH), Nvidia (NVDA) and Alphabet (GOOG). We spend a lot of time on discounted cash-flow valuation, … Read more

Magnificent 7 Earnings Reports Not Bad Thus Far

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By Brian Nelson, CFA   Shortly after Trump’s Liberation Day, where the President unveiled lofty tariffs on numerous countries, we released our wait-and-see outlook for the equity markets, which thus far has proven to be the right move, with the markets largely recovering from the depths reached in April. The S&P 500 (SPY), for example, is down just 3.3% year-to-date, excluding dividends.   A lot has happened since Liberation Day, including easing of tariffs to a 10% baseline for most, if not all, countries, with the key exception of China, where tariffs remain extremely elevated and prohibitive. Many countries are now reportedly negotiating trade agreements with the White House, and we expect China to be added to that list soon, even if … Read more

Trump Tariffs Higher than Expected; What We’re Doing

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By Brian Nelson, CFA The Trump tariff increases came in larger than what we were expecting, and it remains to be seen how they will flow through the global economy, as we monitor potential retaliatory tariffs from other countries. As it relates to the equity markets, we’re taking a wait and see approach at the moment as we monitor new policy changes related to trade, immigration, fiscal (tax), and regulations. In short, we’re not overreacting to the sell off as we won’t have a great handle on the tariff impact to companies for a few quarters when they report results post-tariff increases. That said, we’re expecting continued market volatility, with meaningful risk to the downside, before trade uncertainty alleviates in … Read more

An Important Measure of Leverage for Dividend-Growth and Income-Oriented Shareholders, One That Is Dividend-Adjusted

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As more and more investors rely on company dividends for income, dividends, in our view, have become more debt-like commitments in nature, especially from the perspective of dividend-growth or income-oriented shareholders. Years ago, we rolled out a measure of financial leverage that considers both the company’s debt and the present value of its future expected cash dividend obligations, which, in the eyes of die-hard dividend-growth or income-oriented shareholders, may be implicitly assumed to be debt-like commitments in substance. We think this leverage ratio can be used in conjunction with the Dividend Cushion ratio to gain additional insight into the dividend-paying financial health of an entity. Note: There is often great confusion with respect to published measures of financial leverage, and … Read more

Paper: Value and Momentum Within Stocks, Too

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Please select the image below to download, “Value and Momentum Within Stocks, Too:” Abstract: This paper strives to advance the field of finance in four ways: 1) it extends the theory of the “The Arithmetic of Active Management” to the investor level; 2) it addresses certain data problems of factor-based methods, namely with respect to value and book-to-market ratios, while introducing price-to-fair-value ratios in a factor-based approach; 3) it may lay the foundation for academic literature regarding the Valuentum, the value-timing, and ultra-momentum factors; and 4) it walks through the potential relative outperformance that may be harvested at the intersection of relevant, unique and compensated factors within individual stocks. To download the full report, please click here (pdf). ———- Actual results … Read more

Dividend Increases/Decreases for the Week of July 12

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Below we provide a list of firms that raised their dividends during the week ending July 12. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week                          Almacenes Exito S.A. American Depositary Share (EXTO): now $0.0113 per share quarterly dividend, was $0.0112. América Móvil (AMX): now $0.2608 per share annual dividend, was $0.2560. Ameren Illinois Company PFD 4.92% (AILLM): now $1.232 per share quarterly dividend, was $1.175. Amerigo Resources Ltd. (ARREF): now CAD 0.04 per share quarterly dividend, was CAD 0.03. AptarGroup (ATR): now $0.45 per share quarterly dividend, was $0.41. … Read more

J.M. Smucker’s Free Cash Flow Outlook Solid

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Image: J.M. Smucker’s shares have faced pressure during the past several months, but its free cash flow outlook looks solid. By Brian Nelson, CFA On June 6, J.M. Smucker (SJM) reported mixed fiscal fourth quarter results with revenue coming up a bit short relative to expectations and the bottom line coming in higher than consensus. Adjusted net sales, excluding acquisitions, divestitures, and foreign currency fluctuations advanced 3% thanks to better net price realization in its U.S. Frozen Handheld and Spreads, U.S. Retail Pet Foods, and for International and Away from Home. The company’s volume/mix increased 1% thanks to Smucker’s Uncrustables frozen sandwiches, Folgers coffee, Jif peanut butter, among other areas. Adjusted gross profit increased 15% in the quarter. Adjusted operating … Read more