SPY

I Don’t Know How Lucky I Am, Do You?

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Image: The category of large cap growth (SCHG) has outperformed a 60/40 stock/bond rebalanced portfolio (VBIAX) by ~310 percentage points the past 10 years. Image Source: Morningstar. By Brian Nelson, CFA Hi everyone. I hope you all are doing well. It’s been a while since I wrote a personal message, but today, I thought it would be worthwhile to share my ever-evolving opinion on the world of financial markets. First, let me start with Facebook (FB). Hopefully, I set your expectations very low for the social media giant’s third-quarter report because this one is a long-term holding. Shares are dirt cheap, and while sentiment has moved against it, we’re going to “hold” strong in the Best Ideas Newsletter portfolio (1). … Read more

PepsiCo Flexes Its Pricing Power

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Image Shown: PepsiCo Inc is adeptly navigating various inflationary, labor, and logistical hurdles. Investors have started to warm back up to the name and its impressive pricing power over the past several months. By Callum Turcan On October 5, beverage and snack giant PepsiCo Inc (PEP) reported third-quarter earnings for fiscal 2021 (period ended September 4, 2021) that beat both consensus top- and bottom-line estimates. PepsiCo also raised its full-year guidance for fiscal 2021 in conjunction with the report. Earnings Snapshot The firm’s GAAP revenues grew by 12% year-over-year and its GAAP operating income climbed higher 5% year-over-year in the fiscal third quarter. Strength at PepsiCo’s snacks and beverage business in the Americas, Africa, Middle East, and Asia was key, … Read more

Markets Look Vulnerable, Adding “Protection”

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Image: The S&P 500 (SPY) and corresponding 50-day (green), 100-day (purple), and 200-day moving averages (red). We expect the SPY may have to “correct” to the 200-day moving average, or about $412-$413 per share before it finds its footing. Self-inflicted wounds the past several weeks have altered the market’s sentiment for the worse, and we don’t think the selling is done yet. To read the email, please click here. — Hi everyone: — Volatility has picked up, and options trading is all the rage. — The markets are under pressure again this morning, and we’re not wasting any time to add put option “protection” to both the Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio. The last time we added … Read more

Valuentum Weekly

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Image: Bitcoin, technology and large cap growth have led the pack the past 5 years while pipeline MLPs, crude oil and energy stocks have fallen way behind. Large cap growth > small cap value. Bonds, non-US stocks continue to lag. The Valuentum Weekly is a brand-new weekly market commentary from Valuentum Securities, released each weekend in digital form. The Valuentum Weekly offers members a weekly synopsis of the markets and major events. It will be straight and to-the-point. Our goal is to deliver to you the latest information and insights. We welcome your feedback on how we can make the Valuentum Weekly as useful and as relevant for you as ever! Takeaways The markets offer investors an asymmetric risk opportunity, … Read more

Chinese Stocks Getting Hammered

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Image shown: A confluence of factors are driving Chinese stocks lower, not the least of which is heightened regulatory concerns. By Brian Nelson, CFA The collapse in Chinese equities (FXI) (MCHI) during the trading session July 26 is a reminder (again) why you should consider combining momentum with *enterprise valuation* in stocks, as in the Valuentum process. It’s not enough for you to think a stock is undervalued or cheap. The market must agree with you, too. A falling stock price says the market disagrees. Our favorite ideas for consideration are always in the newsletter portfolios, whether the Best Ideas Newsletter portfolio, Dividend Growth Newsletter portfolio, or High Yield Dividend Newsletter portfolio. We do not have any direct exposure to … Read more

Two Alerts and Bull Market On!

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By Brian Nelson, CFA It’s very hard not to be bullish on the stock market these days. The prudence exercised by many of the largest companies in the S&P 500 remains unprecedented, in our view. Some of the best companies out there have tremendous balance sheets, as evidenced by huge net cash positions. Perhaps two of our favorite companies, Microsoft (MSFT) and Facebook (FB) are the best examples of this, but Apple (AAPL) still retains quite the large net cash hoard as it works to net-cash breakeven. As we look at the next couple years, most investors will continue to focus on the Fed. We’ve seen this song and dance following the Great Financial Crisis (GFC) that wreaked havoc on … Read more

Energy: A Small Part of the S&P 500 But Making a Comeback

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Image Source: Bureau of Land Management By Callum Turcan and Brian Nelson, CFA The energy sector remains a small part of the S&P 500 (SPY), coming in at just ~3% nowadays. Collapsing energy resource prices, overspending on capital projects, and a fallout in the pipeline MLP space have been primary causes for the sector’s ever-shrinking representation in the S&P 500 over the past five years or so, but we still think some exposure is warranted. For starters, we currently include a 1-2% weighting in the Energy Select Sector SPDR (XLE) and a 3%-5% weighting in energy-heavy Berkshire Hathaway (BRK.B) in the Best Ideas Newsletter portfolio. During the past several months, raw energy resource pricing, from crude oil (USO) to natural … Read more

Top Ideas Doing Great

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Image Source: Aguayo Samuel By Brian Nelson, CFA Hi everyone: Hope you’re doing great. The S&P 500 (SPY) continues to roar higher. No longer is the market as easy of a call when we pounded the table near the bottom in April 2020, but we remain bullish on the backdrop. The economy remains very healthy, borrowing rates remain near all-time lows, and widespread interest in equities remains elevated given the paltry yields on alternatives such as investment-grade bonds. We continue to let our winners run, though we remain vigilant in protecting the downside. Quietly, the two top holdings in the Best Ideas Newsletter portfolio, Alphabet (GOOG) and Facebook (FB), have raced to outsized performance during 2021, advancing 43%+ and ~21% … Read more

Risk Management: Diversified Stock Selection or Modern Portfolio Theory?

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Image Shown: If one had concentrated in large cap growth the past 10 years (blue fill), or basically in undervalued stocks that had strong momentum, one would have outperformed the category of small cap value (IWN, second best in chart) and the 60/40 stock/bond portfolio (VBINX, orange) by an incredible 200+ percentage points. Image Source: Morningstar. By Brian Nelson, CFA I hosted a small estate sale late last week. Hours in the blistering sun brought a number of interested buyers and some small change, but that several people and families found use for my brother’s things has left a feeling in me that’s priceless. It’s been a while since one of our emails hit your inbox, but things have been slow … Read more

CubeSmart Outperforms and Boosts Its Full-Year Guidance

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Image Source: CubeSmart – June 2021 IR Presentation By Callum Turcan We are big fans of the self-storage real estate investment trust (‘REIT’) industry given the ability for firms operating in this arena to generate meaningful free cash flows, a difficult task for most REITs considering their hefty capital expenditure requirements. CubeSmart (CUBE) is one of our favorites in the space and we include shares of CUBE as an idea in the High Yield Dividend Newsletter portfolio. Shares of CUBE are up 38% year-to-date as of the end of normal trading hours on June 10, easily outpacing the 12% gain seen in the S&P 500 (SPY) during this period before taking dividend considerations into account. As of this writing, shares of … Read more