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  • AmeriGas: How To Think About Timeliness
    Mon, Aug. 18 APU 1 Comment

    Summary

    • We liken stock selection to a modern-day beauty contest. Find out what we mean.
    • If a firm is undervalued on a DCF basis and on a relative valuation basis, and is showing improvement in momentum indicators, it scores high on the scale.
    • The VBI is a timeliness indicator, and AmeriGas does not garner a high rating.
  • Evaluating Accenture's Economic Value Creation And Fair Value
    Sun, Aug. 17 ACN 1 Comment

    Summary

    • A firm's price is driven by the actions of other investors - not the fundamentals of a company.
    • Our process helps unite fundamentals and market behavior in a systematically-driven methodology.
    • Accenture is one of the strongest creators of economic value, and let's run shares through our value and momentum process.
  • Hormel Foods Has Dividend Appeal
    Thu, Aug. 14 HRL 1 Comment

    Summary

    • The food industry has been in consolidation mode as of late.
    • Hormel Foods has an impressive track record of year-on-year consecutive dividend increases.
    • Shares of the dividend growth giant are a little pricey, but let's have a look.
  • Don't Be Fooled: IBM Still Reporting Low-Quality Earnings
    Tue, Aug. 5 IBM 8 Comments

    Summary

    • IBM has become the poster child for poor earnings quality.
    • A focus on accounting EPS can punish return on invested capital (as money is plowed back into overpriced stock to boost EPS). This is what management is doing.
    • It's hard to accept that IBM is no longer the IBM it once was - it is playing EPS games and pulling the wool over investors' eyes.
    • The agreement with Apple is a sign that IBM has conceded defeat - and would rather work with Apple than suffer at the hands of the revolutionary iPhone maker.
    • There are a plethora of other tech names that we prefer in either the Best Ideas portfolio or Dividend Growth portfolio.
  • Key Insight: Johnson & Johnson's Net Cash Position
    Tue, Aug. 5 JNJ Comment!

    Summary

    • Price and value are two different things. Price is what you pay; value is what you get.
    • Not all value is based on the income statement --- said differently, not all value is calculated as a multiple of earnings, EBIT, or EBITDA.
    • Value also emanates from the balance sheet. In Johnson & Johnson's case, the firm has a very nice net cash position.
    • Its net cash position can be used as reserves to support dividend health or drive further expansion.
    • The net cash position is added to the present value of future cash flows in arriving at equity value. Balance sheet analysis is critical, an area of focus at Valuentum.
  • Will Dominion Resources Cut Its Dividend?
    Fri, Aug. 1 EXC, FE, D 47 Comments

    Summary

    • Just because utilities are supposed to be safe income vehicles doesn't mean they should be excluded from extensive and objective financial analysis. Right?
    • Exelon and First Energy are two examples of how risky utilities' dividends can be -- and shareholders suffered as a result.
    • Let's take a look at Dominion Resources' dividend strength.
  • Leggett & Platt: Evaluating Its Dividend
    Fri, Aug. 1 LEG 11 Comments

    Summary

    • Leggett & Platt has increased its dividend for more than 40 consecutive years.
    • But what does that tell us about the future dividend increases? Not much.
    • Let's have a look at the Dividend Cushion to see if further increases are on the horizon.
  • AMD Won't Ever Catch Intel
    Thu, Jul. 31 INTC, AMD 78 Comments

    Summary

    • The bull thesis on AMD centers on fantasy.
    • AMD simply doesn't have the financial capacity to outrun Intel over the long haul.
    • We don't think AMD will ever create a blockbuster need to permanently reverse fortunes.
  • General Electric Is Not Getting Any Respect
    Tue, Jul. 29 GE 30 Comments

    Summary

    • GE's shares haven't been performing all that great as of late.
    • The company has a record high industrial backlog, expanding cash-rich industrial operations, and a financials portfolio that is de-risking via non-core divestitures.
    • The industrial giant also pays a nice and growing dividend. The market may be off its rocker.
  • Why St. Joe Shareholders Will Inevitably Be Disappointed
    Tue, Jul. 29 JOE 17 Comments

    Summary

    • The math simply does not add up in St. Joe's valuation thesis.
    • The market is assigning significantly higher per-acre value than recent transaction prices to the remaining land on its books.
    • We think the only factor holding the stock up is ongoing de-risking by short investors. Shares are worth $17 each.
  • Hard Not To Like Grupo Televisa
    Fri, Jul. 25 CBS, CTCM, TV 1 Comment

    Summary

    • Grupo Televisa's credit is rated investment-grade by the agencies (Baa1/BBB+).
    • The firm posts a Valuentum Buying Index score of 6, reflecting our "fairly valued" DCF assessment of the firm, its unattractive relative valuation versus peers, and bullish technicals.
    • A 6 is not the best score a firm can receive, however. We have a number of firms that register a 9 or 10 on the index.
  • Amazon Is Not Worth Your Analytical Firepower
    Fri, Jul. 25 AMZN 49 Comments

    Summary

    • We think there are better companies to analyze than Amazon.
    • Management is going to keep spending shareholder money, with little regard to accounting profits.
    • The company's equity is highly speculative until a focus on generating cash flow becomes paramount.
  • Shares Getting Pricey But Scripps Has Valuable Content
    Wed, Jul. 23 SNI Comment!

    Summary

    • Scripps Networks develops lifestyle-oriented content for television and the web. Its TV networks include the Food Network, HGTV, and the Travel Channel, among others.
    • Scripps Networks has an excellent combination of strong free cash flow generation and low financial leverage.
    • Let's take shares through the Valuentum process to learn more about the company.
  • Are You Doing The Jailhouse Rock With This 6%-Yielder?
    Tue, Jul. 22 CXW 32 Comments

    Summary

    • Though the firm is the US' largest owner/operator of privatized correctional facilities, Corrections Corp's business is centered on real estate.
    • The firm recently filed to become a REIT. In doing so, it raised its distribution significantly.
    • We still believe the firm has strong dividend coverage. Let's have a look.
  • Short And Sweet: Microsoft Cuts 18,000 Jobs
    Mon, Jul. 21 MSFT 13 Comments

    Summary

    • Microsoft is removing the shackles that have held it back for so many years.
    • The company's announcement to slash thousands of jobs, while unfortunate for many, are necessary in the fast-paced world of technology.
    • We continue to like Microsoft's shares and think new CEO, Satya Nadella understands what it takes to be successful in a "mobile-first and cloud-first" world.
  • Google: One Of The Best Values In This Overheated Market
    Mon, Jul. 21 GOOG, GOOGL 5 Comments

    Summary

    • Google is trading as if it has average growth prospects.
    • Let's take a look at its most recent quarterly performance to uncover its fantastic pace of expansion.
    • We like shares quite a bit and think the market has its price wrong.
  • Why Ford's Sales In China Continue To Impress
    Mon, Jul. 21 GM, VLKAY, F 5 Comments

    Summary

    • We think investors in Ford will be pleasantly surprising with its operations in China in coming years.
    • The automaker is adding dealerships at a breakneck pace in the country.
    • We believe the best risk-adjusted investment opportunity in the automotive industry is in Ford's shares.
  • Why Abbott's Stake In Mylan Will Be Value-Creative
    Mon, Jul. 21 MYL, ABT Comment!

    Summary

    • The economics of every transaction should be evaluated to see if creates economic value.
    • We think Abbott's deal with Mylan is one such transaction that will be value-creative for shareholders.
    • Let's take a look at how we're thinking about the deal in this article.
  • Why Baxter Is A Fine Dividend Growth Idea
    Fri, Jul. 18 BAX 14 Comments

    Summary

    • Baxter is one of our favorite dividend growth ideas.
    • The company's Dividend Cushion ratio is 1.4. Find out what that means in this article.
    • The firm sports a very nice dividend yield of 2.8%. We expect the firm to pay out about 40% of next year's earnings to shareholders as dividends.
  • Taking Enbridge Through The Valuentum Process
    Fri, Jul. 18 EEP, ENB 6 Comments

    Summary

    • Enbridge operates, in Canada and the US, the world's longest crude oil and liquids transportation system.
    • The firm has a number of advantages, including a sole gathering/collecting system in the Bakken core.
    • Enbridge first started paying distributions in 1953. It targets paying 60%-70% of adjusted earnings as dividends every year.
  • Alcoa Is A Bubble Cyclical Trading At 20+ Times Normalized Earnings
    Thu, Jul. 17 AA 64 Comments

    Summary

    • Alcoa is currently trading as if we'll never see another economic downturn again.
    • The most important component of the valuation process for Alcoa is estimating how its business performs at the mid-point of the cycle.
    • It's easy to get caught up in the excitement of Alcoa's results during economic upswings, but economic troughs--where both volume and pricing wane--are inevitable.
  • Unilever's Dividend Is Levered For Growth
    Tue, Jul. 15 UL 4 Comments

    Summary

    • Do your best to avoid backward-looking dividend analysis.
    • The most important time horizon for investors of all types is the future. Therefore, focus on metrics that measure future dividend growth potential.
    • Let's take a look at Unilever's dividend growth prospects in this article.
  • Strayer Remains A Troubled Stock
    Thu, Jul. 10 STRA 2 Comments

    Summary

    • The for-profit education space remains challenged.
    • Strayer recently suspended its $1 per share dividend, and fundamentals continue to move in the wrong direction.
    • The company registers a 6 on the Valuentum Buying Index. We tend to prefer higher-rated firms in the Best Ideas portfolio and Dividend Growth portfolio.
  • Evaluating GlaxoSmithKline's Dividend
    Thu, Jul. 10 NVS, GSK 8 Comments

    Summary

    • Investors should do their best to avoid backward-looking dividend analysis.
    • The most important time period for dividend growth investors is the future.
    • We think GlaxoSmithKline's dividend growth potential in the future is bright.
  • Declining Propane Demand Will Eventually Threaten AmeriGas' Dividend
    Sun, Jul. 6 APU 34 Comments

    Summary

    • AmeriGas loses customers every year.
    • Its MLP structure means it is heavily dependent on the healthy functioning of the capital markets.
    • The entity's ~8% annual distribution yield is not backed by growing end-market (propane) demand.
  • Why Texas Instruments Is Slowly Going Private
    Fri, Jul. 4 TXN 4 Comments

    Summary

    • Very few firms have bought back 40% of shares in the past decade. Texas Instruments is one of them.
    • Texas Instruments is committed to returning cash to shareholders, and the firm's Valuentum Dividend Cushion score remains solid. It boasts a ~2.5% annual yield.
    • The company registers a 3 on the Valuentum Buying Index. We're waiting for a higher score, and prefer highly-rated companies in the Best Ideas portfolio.
  • Why CarMax Is Priced To Perfection
    Fri, Jul. 4 KMX 1 Comment

    Summary

    • The discounted cash flow model is a lens into market expectations of a company.
    • If shares are trading at the fair value estimate, the firm must achieve forward financial projections to justify its stock price.
    • We think CarMax is priced to perfection. Strong revenue and earnings growth, and a low discount rate drive our fair value estimate of $52 per share.
  • Evaluating Caterpillar's Dividend Growth Potential
    Wed, Jul. 2 CAT 17 Comments

    Summary

    • Do your best to avoid backward-looking analysis.
    • The future is the most important time horizon for dividend growth investors.
    • Caterpillar has a Dividend Cushion ratio of 1. Let's find out what that means.
  • Add KLA-Tencor To The Dividend Growth Watch List
    Sun, Jun. 29 KLAC 4 Comments

    Summary

    • The market is full of strong dividend growth ideas.
    • It's good to always keep an open mind when you're building a dividend growth portfolio for the next 10, 20, or 30 years.
    • The strongest dividend payers of the past few decades may not be the strongest in the next few decades. Resist the urge to do backward-looking analysis.
  • Why This Oil Giant Is Tried And True
    Sun, Jun. 29 XOM 39 Comments

    Summary

    • Exxon Mobil is a company that every investor should become familiar with.
    • The firm's reserve replacement ratios and return on capital metrics are impressive.
    • It pays a healthy dividend, and shares have performed well since early February.
  • Is This Homebuilder's Hefty Dividend On Solid Ground?
    Sun, Jun. 29 MDC 3 Comments

    Summary

    • It's difficult to avoid backward-looking dividend analysis, but investors must focus on the future.
    • The Dividend Cushion is a forward-looking measure that assesses a company's dividend on the basis of the firm's cash flow generation and balance sheet health.
    • Let's examine the industry-leading dividend payer in homebuilding, MDC.
  • Why Intel's Dividend Is A Head-Turner
    Fri, Jun. 27 INTC 18 Comments

    Summary

    • The most important time horizon for dividend growth investors is the future.
    • Do your best to avoid backward-looking analysis.
    • We think Intel will be one of the best dividend growth stocks over the next few decades.