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  • Why Clorox Is Slowly Going Private
    Fri, Oct. 17 CLX 23 Comments

    Summary

    • Clorox is a steady-eddy entity that consistently generates strong economic returns for shareholders.
    • Interestingly, the company is slowly going private, and we'll explain why.
    • We'll also examine the firm's cash-flow-derived intrinsic value and compare it to shares to evaluate its attractiveness from a valuation standpoint.
  • We've Raised Our Fair Value Estimate Of Microsoft Significantly
    Tue, Oct. 14 MSFT 2 Comments

    Summary

    • Market conditions aside, Microsoft remains one of the best bargains out there.
    • We recently raised our fair value estimate of the software giant to $58 per share.
    • Let's walk through the valuation to get a sense of the opportunity.
  • Why Procter & Gamble May Outperform
    Tue, Oct. 14 PG 5 Comments

    Summary

    • Traditionally, consumer staples tend to outperform in declining markets.
    • We'd put Procter & Gamble in this group of firms.
    • Let's examine Procter & Gamble's investment prospects in this piece.
  • Whirlpool Could Be Ripe For An Entry Point - Soon
    Tue, Oct. 14 WHR Comment!

    Summary

    • Very few firms ever score a 9 or a 10 on the Valuentum Buying Index.
    • Whirlpool has done so, but the broader market environment could complicate matters.
    • We think the company is worth putting on your watch list, nonetheless.
  • Adobe Simply Is A Cash Machine
    Mon, Oct. 13 ADBE 1 Comment

    Summary

    • Companies that throw off lots of free cash flow have tremendous financial flexibility.
    • We think Adobe is a cash machine.
    • Let's evaluate the company through the lens of a discounted cash-flow model.
  • Why Gilead Is A Perfect 10
    Fri, Oct. 10 GILD 16 Comments

    Summary

    • Gilead Sciences has a lot of things going for it.
    • Not only is the firm underpriced on a discounted cash flow basis and relative value basis, but the market is adding conviction to the valuation thesis via pricing strength.
    • Said differently, Gilead Sciences is a perfect 10 on the Valuentum Buying Index -- a very rare score.
  • An Exercise In Valuation: Oracle
    Wed, Oct. 8 ORCL 4 Comments

    Summary

    • An intrinsic value estimate differs from a price target.
    • An intrinsic value estimate calculates what shares are worth on the basis of a discounted free cash flow stream.
    • A price target is simply an opinion of an analyst as to where shares might trade at some point in the future, sometimes based on non-firm-specific noise.
    • Let's calculate a fair value estimate for Oracle in this article.
  • Nike Has Strong Fundamentals; Valuation Not Attractive, Though
    Wed, Oct. 8 NKE Comment!

    Summary

    • Nike's recent quarterly results were as strong as ever.
    • The company's brand continues to resonate with consumers, and innovation remains ongoing.
    • Shares, however, aren't cheap. And unfortunately, that's the most important thing.
  • A Calculation Of Philip Morris International's Fair Value
    Wed, Oct. 8 PM 7 Comments

    Summary

    • We think the present value of future free cash flows is one of the best ways of estimating intrinsic value.
    • Let's calculate Philip Morris International's future free cash flows.
    • By discounting those free cash flows back to today, we arrive at an intrinsic value estimate of the company.
    • Comparing this intrinsic value estimate to its stock price determines whether shares are overvalued or undervalued.
    • Let's estimate Philip Morris International's intrinsic value.
  • Estimating E.ON's Intrinsic Value
    Tue, Oct. 7 EONGY 2 Comments

    Summary

    • Utilities may be steady-eddy entities, but they are not without risks to the valuation.
    • We think an estimate of future free cash flows is the best way to estimate intrinsic value.
    • Let's compare E.ON's intrinsic value to its stock price to see if shares are undervalued or overvalued.
  • Estimating Kraft's Intrinsic Value
    Sun, Oct. 5 KRFT Comment!

    Summary

    • We think free cash flows are a key source of intrinsic value.
    • Let's arrive at a fair value estimate for Kraft's shares.
    • We'll also apply a margin of safety around the fair value estimate to assess whether shares are undervalued or overvalued.
  • We're Never Going To Add LinkedIn To The Portfolios
    Fri, Oct. 3 LNKD 1 Comment

    Summary

    • LinkedIn investors haven't seen a recession yet. We think its business model may be ultra-cyclical.
    • We think the true intrinsic value range for LinkedIn is incredibly large.
    • The firm's business model is not something that we'd consider adding to the newsletter portfolios. We just don't find it to be a very attractive business.
    • We can't see Warren Buffett investing in shares.
  • Estimating Baidu's Intrinsic Value
    Fri, Oct. 3 BIDU 3 Comments

    Summary

    • Estimating future free cash flows are an inescapable part of equity analysis.
    • Let's calculate Baidu's cash-flow-derived intrinsic value estimate to assess whether a price-vs.-value mismatch exists.
    • We'll also provide a margin of safety around the fair value estimate to arrive at a fair value range.
    • We'd consider the firm attractive on a discounted cash-flow basis if it trades outside the fair value range on the low end.
  • General Mills May Outperform
    Wed, Oct. 1 GIS 3 Comments

    Summary

    • The market may be headed for a correction, but we think General Mills may outperform.
    • The company simply dominates the cereal market, and we don't think people are going to stop eating cereal anytime soon.
    • The firm also has a rather large yield to entice investors. Let's have a look at its valuation in this piece.
  • Why We Think Procter & Gamble Is A Fantastic Dividend Growth Idea
    Wed, Oct. 1 PG 1 Comment

    Summary

    • We continue to like the pricing power of Procter & Gamble’s brands.
    • The company's earnings growth remains robust.
    • We think it is a fantastic dividend growth idea.
  • Why PPL Is Our Favorite Utility
    Tue, Sep. 30 PPL 9 Comments

    Summary

    • PPL and private-equity firm Riverstone will create one of the largest independent power producers.
    • Upon closing, PPL Corp's shareowners will own 65% of Talen Energy and Riverstone will own the balance.
    • PPL still expects 4% annual earnings-per-share expansion, which should continue to propel dividend growth.
  • Why We're Big Fans Of Kellogg
    Mon, Sep. 29 K Comment!

    Summary

    • Kellogg has a number of iconic brands. Pop-Tarts is a great example and has an impressive 80%+ share in the toaster pastries market thanks to strong advertising and innovation efforts.
    • The firm's acquisition of Pringles continues to perform better than expected. Pringles' potato chip business gives Kellogg a solid growth engine in emerging markets.
    • Evaluating the difference between price and value is key to any investment decision. Let's take a look at this relationship as it relates to Kellogg.
  • Keep An Eye On Union Pacific's Operating Ratio
    Mon, Sep. 29 UNP Comment!

    Summary

    • The operating ratio for a railroad is the inverse of the operating margin -- the lower the better.
    • We think Union Pacific's operating ratio will be the best among peers by the end of this decade, aided in part by renewed pricing strength.
    • The firm also boasts a strong Valuentum Dividend Cushion ratio and a decent annual yield. It continues to up its payout.
  • Why We Like Campbell Soup
    Sat, Sep. 27 CPB 7 Comments

    Summary

    • Campbell Soup doesn't score as high on our methodology, but we like the company's tried-and-true nature.
    • Business quality (an evaluation of our ValueCreation and ValueRisk ratings) ranks among the best of the firms in our coverage universe. The company has an Economic Castle.
    • We especially like its efforts to reinvigorate its North American soups business and the pace of new product launches.
    • Let's have a look at the shares.
  • Why Home Depot Is Simply Better Than Lowe's
    Fri, Sep. 26 HD Comment!

    Summary

    • Investors seemed confused about which company is better: Home Depot or Lowe's?
    • To us, the answer is clear.
    • Home Depot stands out on a variety of measures.
  • Cisco: Not The Best Idea In Big Cap Tech
    Fri, Sep. 26 CSCO 10 Comments

    Summary

    • It’s hard not to like Cisco’s strong free cash flow generation, solid cash balance and dominance in the communications networking market.
    • Cisco is making the best out of a difficult situation.
    • We continue to prefer Microsoft and Apple as better ideas, all things considered.
  • Why Google Has Upside To $800-Plus Per Share
    Thu, Sep. 25 GOOG, GOOGL 12 Comments

    Summary

    • Google is simply a powerhouse when it comes to search, and we don't think there is another firm in the world that can unseat the behemoth.
    • We're also fans of the company's valuation and think investors aren't giving it enough credit for its free cash flow profile. The firm has a very attractive Economic Castle.
    • Google is a one of our favorite fundamental ideas, and we don't see that changing anytime soon.
    • Very few firms are more attractive. We like the company quite a bit.
  • What We Think Of Southern Company
    Wed, Sep. 24 SO 12 Comments

    Summary

    • We think a focus on both the valuation opportunity and dividend strength is key.
    • We like that more than 90% of Southern's earnings are from regulated subsidiaries. Management is targeting earnings per share in the ranges of $2.80-$2.91 and $2.89-$3.03 for 2015 and 2016,.
    • Southern Company registers a ~0 on the Dividend Cushion measure because it pays out a significant amount of earnings as dividends and has a large debt load.
    • Still, we expect the company to raise its dividend by 7 cents per annum on the basis of management's near-term expectations.
    • On a cash-flow basis, we value Southern Company at $41 per share. The company registers a 6 on the Valuentum Buying Index.
  • Teva: On The Auction Block?
    Tue, Sep. 23 TEVA 3 Comments

    Summary

    • Teva still offers an asymmetrical risk-reward opportunity.
    • The company’s generic business showed significantly improved profitability.
    • We continue to expect Teva to become either a target or a beneficiary from a merger-of-equals scenario.
  • Why Coca-Cola Is A Great Asset Allocator
    Tue, Sep. 23 KO 6 Comments

    Summary

    • Coca-Cola has become a savvy asset manager, and we think recent moves speak volumes about the company’s strategy to retain dominance in the non-alcoholic beverage space for decades to come.
    • We give high marks to Coca-Cola’s management in consummating both of the Monster and Green Mountain transactions.
    • Shares of the firm aren’t cheap, however, and we think there will be a better entry point for new money.
  • We Could Have Done Better With Hewlett-Packard
    Tue, Sep. 23 HPQ 6 Comments

    Summary

    • In investing, there are always trade-offs, and one of the challenges we face as a publisher is being crystal clear about this.
    • We'll acknowledge the view that we didn’t perform as well as we could have with respect to Hewlett-Packard.
    • We think it's important that we bring up stocks that we didn't do so well with.
    • Having a conversation helps members get a better understanding of the Valuentum process, its many underlying components, and when to make qualitative adjustments to the systematic output, when applicable.
  • Why Peltz's Reasons For Breaking Up Pepsi Do Not Hold Water
    Tue, Sep. 23 PEP 19 Comments

    Summary

    • Breaking Pepsi apart is a bad idea, and Pepsi’s management knows it.
    • Nelson Peltz still has this one wrong.
    • Let's find out why in this article.
  • Tiffany Dazzles; Coach Now Yielding ~4%
    Tue, Sep. 23 TIF, COH 2 Comments

    Summary

    • Tiffany has been benefiting from a modernization of its classical jewelry line-up, thanks to the ongoing success of its newest ATLAS collection and TIFFANY T jewelry collection.
    • Tiffany has raised its earnings target in each of the past two quarters. Fundamentals have never been stronger.
    • However, we prefer Coach. Let's find out why in this piece.
  • General Mills Overpaid For Annie's, But It Probably Had To
    Fri, Sep. 19 GIS 4 Comments

    Summary

    • General Mills is about as steady-eddy as it gets when it comes to business models.
    • The firm has taken a large leap in scooping up Annie's assets.
    • Let's calculate the intrinsic value of General Mills, assuming the Annie's deal is value-neutral.
  • Why Twitter Isn't Worth A Tweet
    Thu, Sep. 18 TWTR 13 Comments

    Summary

    • Investors are euphoric about the prospects of social media companies. We think Twitter is late to the game.
    • We have to be reasonable here. Twitter is a news service, and there are just too many of those for its business model to be sustainable over the long haul.
    • One-hundred forty characters is too short for advertisers to get excited about. If a firm can sell a product in less than 140 characters, then it certainly doesn't need Twitter.
    • Let's walk through a valuation of Twitter in this piece.
  • Boy, Were We Wrong About Yahoo
    Thu, Sep. 18 YHOO 83 Comments

    Summary

    • We strive to be as transparent as possible -- something we think investors find comforting.
    • Yahoo has been a call that frankly we missed. We could have done better.
    • Let's get an update on our valuation thesis on the company.
  • This Firm Has Pricing Power
    Thu, Sep. 18 HSY 9 Comments

    Summary

    • One of the strongest pieces of evidence of a competitive advantage is when a firm can raise prices, pretty much at will.
    • We think Hershey is one of those companies.
    • Let's calculate the firm's intrinsic value and run shares through the Valuentum Buying Index.