VGR

In The News: Market Volatility, iPhone Unit Concerns, Wildfire Liabilities Piling Up

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Let’s take a look at some top stories from around the markets including headlines in the biotech and tobacco spaces, some household names facing material selling pressure, and the significant impact of massive wildfires in California. By Kris Rosemann Market volatility persists as of the November 12 trading session. Concerns surrounding global trade disputes and a stronger dollar are weighing on investor expectations, and multiple big name companies facing selling pressure only add to less than rosy outlooks. The biotech space (XBI) remains under pressure with future price uncertainty providing a material overhang, and big tobacco is under pressure as a result of the potential for a ban on menthol cigarettes from the FDA. Simulated newsletter portfolio holding Altria (MO) … Read more

In The News: Chemical Margins Tighten, Philip Morris Total Volume Rises, Consolidation in ETFs

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PPG Industries is experiencing notable margin headwinds, international tobacco giant Philip Morris has experienced solid total volume performance in 2018, and Invesco continues its pursuit of a significantly larger ETF business. By Kris Rosemann PPG Industries (PPG), one of our favorite chemicals companies on a fundamental basis, has experienced notable selling pressure in recent weeks as a result of its preliminary third quarter results released October 8. It noted a number of headwinds to its bottom-line, despite selling prices increasing for the sixth consecutive quarter in the third quarter of 2018. Cost inflation was the highest since the “cycle began two years ago,” a reference to the beginning of the rebound in energy resource pricing, a key consideration for chemical … Read more

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

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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

Yes — Anheuser-Busch’s and Vector Group’s Dividends Aren’t Solid

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Image Source: A-B Inbev A couple other research shops have said that Anheuser-Busch’s and Vector Group’s dividends may be at risk, and we agree. Both of their Dividend Cushion ratios are far below 1, and Anheuser-Busch’s Dividend Cushion ratio is -0.6! Are we expecting a dividend cut tomorrow? No. But we prefer dividend growth ideas that have Dividend Cushion ratios far greater than 1. By Brian Nelson, CFA You have to learn our methodologies to understand what we are talking about. For example, there are volumes of information contained in just one number such as the Dividend Cushion ratio (select links: efficacy rate of approximately 90%, how the Dividend Cushion ratio is calculated). This is partly why we spend so … Read more

In The News: Hurricane Florence, Tariffs and Capital Spending Delays, Kroger and Big Tobacco on the Move

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  Let’s take a look at some of the top stories across the market, including the impact tariffs are having on capital spending plans and bottom lines and recent developments in big tobacco. By Kris Rosemann As Hurricane Florence bears down on the East Coast of the US, risk modeling firm RMS believes US insurers should be bracing for $20 billion in losses. More than 1 million people have been ordered to evacuate the area, and the threat of a combination of storm surge, wind, and inland flooding may prove to be significant as Duke Energy (DUK) estimates 1-3 million customers may be left without power across North and South Carolina. Privately-held Liberty Mutual Insurance and Nationwide Mutual Insurance are … Read more

Valuentum’s Weighted Average Cost of Capital (WACC) Distribution

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The weighted average cost of capital is one of the most subjective measures in corporate finance, but it is also one of the most important ones. “The most important item over time in valuation is obviously interest rates…If interest rates are destined to be at low levels…It makes any stream of earnings from investments worth more money. The bogey is always what government bonds yield….Any investment is worth all the cash you’re going to get out between now and judgment day discounted back. The discounting back is affected by whether you choose interests rates like those of Japan or interest rates like those we had in 1982…When we had 15 percent short-term rates in 1982, it was silly to pay … Read more

Study: Valuentum’s Best Ideas Newsletter Portfolio

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

Philip Morris Shocks the Tobacco Space But Why?

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Image Source: Philip Morris Investors are overreacting to Philip Morris’ first-quarter 2018 report, and the company is dragging the entire tobacco industry down with it. By Brian Nelson, CFA The market seems like it has gone “mad,” with Philip Morris trading off nearly 20% following its first-quarter report April 19. The company beat on the bottom line, while revenue roughly came in-line for the period, and the cigarette maker raised its full-year diluted earnings per share forecast to be in a range of $5.25-$5.40, above consensus forecasts of $5.26 and representing ~35%-39% growth versus the $3.88 mark in 2017. The regulatory landscape in tobacco remains in influx, with the FDA looking to set maximum nicotine levels in cigarettes, new rules … Read more

ICYMI: Valuentum’s Improved Stock and ETF Web Pages

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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

The “Luck” and “Randomness” of Index Funds

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Please select the image below to download the document. Image shown, page 1 of 14. Tickerized for Valuentum’s coverage universe.