UTX

2,350-2,750 on the S&P? Could the Coronavirus Catalyze a Financial Crisis?

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Image: We think a rather modest sell-off in the market to the target range of 2,350-2,750 on the S&P 500 is rather reasonable in the wake of one of the biggest economic shocks since the Global Financial Crisis. The chart above shows how far markets have advanced since 2011, and an adjustment lower to the target range of 2,350-2,750 is rather modest in such a context and would only bring markets to late 2018 levels (note red box as the target range). The range reflects ~16x S&P 500 12-month forward earnings estimates, as of February 14, adjusted down 10% due to COVID-19. When companies like Visa talk about a couple percentage points taken off of growth rates, one knows that … Read more

Dividend Increases/Decreases for the Week Ending April 29

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Below we provide a list of firms that raised/lowered their dividends during the week ending April 29. 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 abaxis (ABAX): now $0.12 per share quarterly dividend, was $0.11.         Allegiant Travel Company (ALGT): now $0.70 per share quarterly dividend, was $0.30. American National Insurance (ANAT): now $0.82 per share quarterly dividend, was $0.80. AmeriGas Partners (APU): now $0.94 per share quarterly dividend, was $0.92. Ameriprise Financial (AMP): now $0.75 per share quarterly dividend, was $0.67. Apple (AAPL): now $0.57 per share quarterly dividend, was $0.52. … Read more

ICYMI — Video: Will Hasty Policy Facilitate the Next Leg Down, or Do We Have It Coming Anyway?

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President of Investment Research and award-winning author of Value Trap: Theory of Universal Valuation Brian Nelson explains how US policymakers are stuck between a rock and a hard place, and how the market may be factoring in too high of a probability of a return to normalcy before 2021. This and more in the latest video report. Summary Make sure you review Value Trap on Amazon. Do so here. We think those that bought equities near the bottom of this swoon may be looking to take profits at present levels. The market is currently reflecting an 80%-85% probability of a return to normalcy before 2021, which we believe is too high at this time. Our main concern is that government … Read more

Top Research and Ideas You May Have Missed

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Is Quant Value Giving Intrinsic Value Investors a Bad Name? Surely, you don’t believe Warren Buffett’s “style” is out of favor? By Brian Nelson, CFA I need to make sure that you’re aware of something very important. The media and perhaps many investment professionals define the concept of “value” as companies with low price-to-book (P/B) ratios, and the concept of “growth” as companies with high price-to-book ratios. This definition of “value” and “growth” and their corresponding returns have been magnified in writings throughout the media and across quantitative research, even in prestigious journals. Warren Buffett has been rallying against most quantitative applications and how “growth” and “value” are defined in popular media and quantitative research for decades.  Here’s one of the Oracle’s most … Read more

Nelson: The 16 Most Important Steps To Understand The Stock Market

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A previous version of this article appeared on our website July 21, 2013. Refreshed and updated throughout, as of July 2018. By Brian Nelson, CFA After earning my MBA at the University of Chicago Booth School of Business and training stock and credit analysts from large organizations over the past decade or so, I have heard just about every question (though I admit I am still surprised by many things and remain a very humble student of the markets). I’ve also spent years perfecting the discounted cash flow process for large research organizations such as Morningstar and studied under one of the most famed aggressive growth investors of all time, Richard Driehaus. My knowledge runs the gamut from value through … Read more

Nelson on Bogle, Part I

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“The kind of commentary that makes broad generalizations about expectations of future returns is exactly why people are so eager to get into passive investment strategies. Since the 1920s, it seems as though the individual investor has assumed the stock market was rigged or impossible for average Joes to figure out, but instead of the “I’ll get it next time” mentality that was present leading to the crash of ’29, individual investors have “evolved” to the point that now the idea is if you can’t beat the market, just buy the whole thing. Leaders like Bogle continue to take tremendous shortcuts in explaining forecasts, leaving the average investor like a student trying to copy math homework off a peer that … Read more

Boeing Declares Victory But Farnborough Disappoints

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Image Source: Boeing By Brian Nelson, CFA Nearly a decade ago, Boeing (BA) and Airbus (EADSY) made some big bets on the future. On one hand, Boeing envisioned a world of increasing point-to-point travel requiring wide-body aircraft with ultra-fuel efficient economics, laying the groundwork for the blueprint of the 787 Dreamliner, a mostly-composite aircraft. Airbus, on the other hand, had a different view of the future. The European plane maker believed that air travel would be dominated by the hub-and-spoke system where massive planes would be needed to transport passengers between global hubs. It decided to build the massive A380 superjumbo. If Boeing had not already declared victory, it can probably do so now. In mid-July, Airbus announced that it … Read more

The Impact of the US Housing Recovery Cannot Be Underestimated

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Valuentum reveals the far-reaching implications of a strengthening US housing market.

The “Hierarchy” of Valuentum Idea Generation

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Let’s talk about this hierarchy of idea generation in this note. —  A version of this article was sent to members previously. New content has been added.  — Note: We continue to work to optimize the signal-to-noise ratio in our work, and we are evaluating expanding our update cycle to half-year periods to better bolster the signaling aspects of the Valuentum Buying Index (VBI). In our widely-read case study (see here), the VBI showed its ability to rank equity returns over a forward 12-month period, and we think a migration to less-frequent updating may make the most sense to better capture the forward-looking dynamics of the system. We think this will help weed out false breakouts and other noise that could be harmful. You shouldn’t think of … Read more

Why We Like Lockheed Martin as a Defensive Dividend Growth Play

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Image Source: Lockheed Martin Corporation – Third Quarter Fiscal 2019 Earnings Presentation By Callum Turcan On January 13, 2020, we announced (link here) we were making some major changes to our newsletter portfolios and that included adding major defense contractor Lockheed Martin Corporation (LMT) to the Dividend Growth Newsletter portfolio with a modest 2.5% – 3.5% weighting. Lockheed Martin is the lead contractor on the massive F-35 fighter jet program, has an expansive slate of weapon systems offerings (including the Javelin and Paragon systems), owns helicopter company Sikorsky (which sells aircraft for military, governmental, and civilian purposes), and offers a wide range of other defense related products and services (radar, sensors, etc.). The company is also the lead contractor on … Read more