TM

In The News: Record-Low Smoking Rates, China Steel Demand Concerns, and a New Look GM

by

US smoking rates are at all-time lows, and the FDA is pushing to restrict sales of menthol products and flavored e-cigarettes. Meanwhile General Motors has announced an accelerated restructuring plan, and concerns have cropped up regarding steel demand in China. By Kris Rosemann The Centers for Disease Control and Prevention (CDC) estimates that 14% of US adults, or roughly 34.3 million people, smoked cigarettes in 2017, a record low, compared to 15.5% in 2016 and 42.4% in 1965, the first year the figure was tracked. Public health initiatives have clearly played a role in the decline, but the CDC also estimates that 47 million people still use some form of tobacco product. The US Food and Drug Administration (FDA) is … Read more

General Motors Overcomes Challenges in Strong Third Quarter; Ford Backs Off 2020 Targets

by

Image Source: GM third-quarter earnings presentation Despite challenges in its cost structure and the Chinese market, simulated newsletter portfolio idea General Motors turned in a strong third quarter report, and shares reacted favorably after several months of selling pressure. Rival Ford also reported a solid third quarter report, but it no longer expects to hit its 2020 EBIT margin and ROIC targets. By Kris Rosemann Shares of simulated newsletter portfolio idea General Motors (GM) leapt during the October 31 trading session after the company released a strong earnings report before the open that included record third-quarter adjusted diluted earnings per share and record third-quarter equity performance from GM China. Net revenue in the period advanced 6.4% on a year-over-year basis to … Read more

In the News: Expensive Energy, China’s Trade Surplus and Auto Market, and Big Tobacco Developments

by

The IEA is concerned about the impact of rising energy prices on global economic growth, and both it and OPEC have lowered near-term oil demand growth expectations. The impact of the US-China trade dispute continues to be sized up by a number of industries, including automakers, and big tobacco companies may be looking to the cannabis market for future growth as the space remains sensitive to potentially increasing regulations.  By Kris Rosemann US stocks bounced back early in the October 12 trading session thanks in part to encouraging earnings reports from the likes of JPMorgan Chase (JPM) and Citigroup (C) and a slight reversal of the yield curve’s recent flattening move. Simulated Best Idea Newsletter portfolio idea Visa (V) gained … Read more

SEC Says Tesla’s Musk Broke Securities Laws, Allows Him to Retain CEO Role

by

Image Source: SEC_News via Twitter The SEC may have set a dangerous precedent in settling with Musk and allowing him to remain CEO. Musk and Tesla will also pay a monetary fine and add more independence to the boardroom as a result of the entrepreneur’s alleged market-manipulating behavior conducted through Twitter. We don’t think Tesla, a company with just $50 billion market capitalization and makes no money, is too big to fail. Musk’s settlement with the SEC is a sweetheart deal, and one that now has the stock soaring. By Brian Nelson, CFA In what has been a wild turn of events, first starting with a series of go-private tweets from Tesla (TSLA) CEO Elon Musk and a determination to … Read more

In the News: Tesla’s Musk Charged with Securities Fraud; Facebook’s Security Issue

by

We continue to stay as far away from Tesla as possible. The company’s stock could still crater even more. It does not have a firm foundation at all. Facebook, despite being under continuous and tremendous scrutiny, is operating on a firm foundation, however. We continue to like shares of the social media giant, despite a recently-disclosed security problem. The more Facebook beefs up security and augments its platform, the bigger its competitive advantages become, as the entry costs for new entrants become even more insurmountable. By Brian Nelson, CFA On Thursday, market observers were glued to CNBC as the television network broke the story: The SEC has charged Tesla’s (TSLA) Elon Musk with securities fraud. You can read the press … Read more

BMW’s Profit Warning Hits Automakers; General Motors Still Attractive

by

Image Source: Ya, saya inBaliTimur BMW became one of the first auto manufacturers to note a tangible negative impact of the US-China trade war, and its reduced expectations have impacted investor confidence in the near-term profit levels of other automakers, including simulated newsletter portfolio idea General Motors. By Kris Rosemann Simulated newsletter portfolio idea General Motors (GM) continues to fight through near-term challenges, but we remain fans of its longer-term outlook thanks to its initiative to expand its North America EBIT-adjusted margin to 10% as well as the positioning of its GM Cruise division, which received a nice injection of capital earlier this year via a partnership with SoftBank’s (SFTBY) Vision Fund. The company’s shares are trading at a miniscule multiple … Read more

Ford Facing Bumpy Road

by

Image source: Michael The second-largest US automaker is facing a number of challenges in its business, and Moody’s recently cut its credit rating to one notch above junk status. Let’s take a look at the factors at play behind the downgrade. By Kris Rosemann There are a number of moving parts at Ford (F) these days, and the uncertainty surrounding the uphill climb it is facing has resulted in speculation over a potential dividend cut and a credit downgrade from Moody’s. The company’s plan to cease nearly all production of cars for the US market caught many investors by surprise, and it continues to struggle in multiple international markets. The most recent headline it made was the release of its August … Read more

Study: Valuentum’s Best Ideas Newsletter Portfolio

by

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

ICYMI: Valuentum’s Improved Stock and ETF Web Pages

by

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

Tesla’s Shares Get Hammered

by

Tesla’s shares have been overpriced for some time, but the Valuentum Buying Index system didn’t raise a big red flag until mid-June of last year. Shares have been getting hammered. By Brian Nelson, CFA What more can we say about Tesla (TSLA) other that the stock, itself, may very well be made up of “castles in the air?” A tremendously debt-heavy balance sheet and considerable free-cash-flow burn shouldn’t have merited an equity market capitalization that it once had, and recent developments have moved to deflate some of its bubble. The future for Tesla is far from guaranteed, too, and it looks like autonomous driving may not be coming to a town near you anytime soon after all. A fatal crash … Read more