XLP

Consumer Staples Earnings Roundup

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Image Source: Mike Mozart Let’s take a look at the earnings reports of some of the largest consumer staples companies. Margin performance left a good deal to be desired across the space as transportation and raw material costs are largely on the rise, and organic growth trends could be better. Companies included: Kellogg, Kraft Heinz, Kimberly-Clark, and Colgate Palmolive. By Kris Rosemann Macroeconomic uncertainty stemming from geopolitical tensions and potentially slowing economic growth in emerging markets have played a role in stagnant top-line growth for consumer staples entities of late, and ongoing pricing and promotional battles are not likely to go away anytime soon as the proliferation of the convenience of online shopping has brought about a new era in … Read more

The Inflating Index Fund Bubble

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Image Source: Mac.Else von Berlin The investment industry is changing fast, and we’re happy to be an instrument for change. We’ve been clamoring to make index funds free for a long time, and we’re glad to see it finally happen. Let’s cover the implications of indiscriminate buying regardless of price with the observation that the number of publicly-traded companies is vastly shrinking. How long will the inflating index fund bubble last? By Brian Nelson, CFA Those that know Valuentum know that we stand up for the individual investor, and we work our tails off to make sure that we get the individual investor the very best of information and informed judgment. The CFA Institute via its Enterprising blog showcases a … Read more

Dividend Growth Still A Resilient Theme

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Rising interest rates may pose headwinds to yield-sensitive dividend payers, but we think dividend growth investing remains a resilient theme. We’re big fans of the concept of yield-on-cost, but close attention to valuations, free cash flow generation and balance-sheet health will remain critical. By Brian Nelson CFA We’re big fans of dividend growth investing. Identifying strong businesses that generate considerable free cash flow and have healthy balance sheets to cushion against their growing dividends is one of the key themes of the Dividend Growth Newsletter and its simulated portfolio. The concept of yield-on-cost is a very important one, too, and something that any dividend growth investor should be aware of. Scooping up a dividend-paying company that has a juicy dividend … Read more

Trade Worries Back on the Table

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Image Source: Michael Vadon We think investors shouldn’t overreact, but we didn’t have two world wars in the last century because leaders of superpowers “got along” nicely. By Brian Nelson, CFA News that President Trump is asking to identify $200 billion worth of Chinese goods on which to levy a 10% tariff has the markets a bit jittery. China’s Ministry of Commerce responded that if the US moves forward with the tariffs, it would take “comprehensive quantitative and qualitative measures and retaliate forcefully.” We expect news regarding trade tensions between the US (SPY, DIA) and China (FXI, MCHI) to only intensify in the coming weeks, as the White House seeks to pursue what is likely game theory to achieve better … 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).

Campbell Soup Representative of Weakening Consumer Staples Equities

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Image Source: Neil Conway When our team presented at the CFA Society of Houston in March 2017, we warned about the possible coming pressures on consumer staples stocks, and so far, our concerns have come to fruition. Not only have a number of high-profile players in the tobacco and beverage arena soured, but household consumer products and packaged foods players have felt the pain, too. Campbell Soup’s recent fallout has been among the worst. Shares have been halved since mid-2017. Download slide deck — March 8, 2017: Trust the Numbers, Not Just Management, CFA Society Houston, Kris Rosemann and Brian Nelson, CFA By Brian Nelson, CFA The consumer staples sector, as measured by the Consumer Staples Select SPDR ETF (XLP), has … Read more

What’s Working (or NOT Working) in Today’s Market?

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Image shown: Crude oil continues to lead gainers while consumer staples, REITs, and energy MLPs continue to get shellacked. By Kris Rosemann The stock market during the first few months of 2018 has been marked by a meaningful return to volatility. Commodity prices from crude oil (USO) to aluminum have had their moments in the sun as material supply/demand imbalances of years past continue to sort themselves out, with the help of a few key players, of course (OPEC member nations in the case of crude oil, and Chinese pollution regulations and US trade policy changes in the aluminum example). Geopolitical uncertainty is keeping both world leaders and investors on their toes as the world continues to navigate multiple denuclearization … Read more

We Said Consumer Staples Would Underperform

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Consumer Staples Stocks Underperform — We think investors are wising up to the risks of consumer staples stocks, and increasing risk-free rates seem to already be complicating the investment decision-making process for many investors. Consumer staples equities in the S&P 500 are currently trading at ~19.4 times forward 12-month earnings, well above their sub-17 times 10-year trailing average. We believe investors will continue to swap out of these steady-eddy, but overpriced, gems in the near term, in favor of higher-beta commodity and energy-oriented companies as the market sets up to surge in 2017. We have been warning about the tipping point in Treasury yields and implications on dividend-paying consumer staples equities for some time. – Brian Nelson CFA, December 2016, … Read more

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