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  • 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.
  • Investors Are Overpaying For Federal Realty's Dividend Track Record
    Tue, Sep. 16 FRT Comment!

    Summary

    • It's sometimes difficult to explain to new investors that a dividend track record isn't worth paying up for. In fact, nothing is worth paying above intrinsic value for.
    • Federal Realty has raised its dividend in each of the past 45+ years, longer than any REIT.
    • However, we think investors are more focused on the company's dividend growth than its valuation. This could end badly.
    • Federal Realty's shares are pricey. Even a minor slip up could send shares tumbling. Short interest has started to bubble.
  • Calculating Facebook's Intrinsic Value Is Not Insurmountable
    Mon, Sep. 15 FB 33 Comments

    Summary

    • Facebook has a future free cash flow stream just like any other company. The stream can be discounted and a fair value can be estimated.
    • The challenge with Facebook is that the company's future free cash flow stream has a wide range of outcomes both to the upside and to the downside.
    • This is why Benjamin Graham's margin of safety is critical in evaluating entry and exit points in Facebook. We can't ignore the future because it is difficult to predict.
    • Though we weren't fans of its IPO, we revised our view and placed an $80 fair value when shares were in the mid-$40s. Its price has converged to those levels.
    • In this piece, let's calculate Facebook's updated fair value estimate and arrive at what we consider to be fair margin of safety.
  • Evaluating GlaxoSmithKline's Intrinsic Value
    Fri, Sep. 12 GSK 15 Comments

    Summary

    • A firm's value is based on the future free cash flows that it generates for shareholders.
    • Within pharma and the biotech space, these cash flows can sometimes be difficult to predict.
    • Still, we think GlaxoSmithKline is worth a look, and we point to its dividend as a source of particular interest.
  • Why Nestle Is One For Your Radar
    Fri, Sep. 12 NSRGY 1 Comment

    Summary

    • Nestle's business quality (an evaluation of our ValueCreation and ValueRisk ratings) ranks among the best of the firms in our coverage universe.
    • Nestle has an excellent combination of strong free cash flow generation and low financial leverage.
    • Keys to Nestle's ongoing success will include brand support, innovation acceleration, and appropriate pricing to meet consumer needs.
  • How To Evaluate Express Scripts' Timeliness
    Tue, Sep. 9 ESRX 2 Comments

    Summary

    • Improving one's ability to pick entry and exit points is a valuable way to enhance returns.
    • Combining value and momentum indicators in order to determine the timeliness of a particular investment is a strategy for consideration.
    • Let's take a look at how this analysis shapes up for Express Scripts.
  • Assessing The Timeliness Of Unilever's Shares
    Thu, Sep. 4 UL 3 Comments

    Summary

    • Investors must translate qualitative assessments into quantitative outputs to make the best investment decision.
    • The intrinsic value calculation of Unilever reflects the discounted present value of its free cash flows, which are a function of its competitive advantages and other qualitative factors.
    • Let's apply the Valuentum rating system to assess Unilever's timeliness as an investment.
  • Evaluating Tyson Foods' Intrinsic Value
    Fri, Aug. 29 TSN 9 Comments

    Summary

    • Tyson Foods has been a star performer in recent periods.
    • The company has yet to trigger a "we'd consider selling" rating after registering one of the highest scores on the Valuentum Buying Index.
    • Though not as attractive as it currently was, Tyson Foods' garners an Economic Castle.
  • Evaluating J&J Snack's Investment Prospects
    Sat, Aug. 23 JJSF 1 Comment

    Summary

    • We liken stock selection to a modern-day beauty contest. In order to pick the winner of a beauty contest, one must know the preferences of the judges.
    • Let's talk about why we think this and how it applies to J&J Snack.
    • We'll also evaluate the firm's return on invested capital and calculate an intrinsic value assessment.
  • Hasbro's Dividend Growth Prospects Remain Intact
    Fri, Aug. 22 HAS 2 Comments

    Summary

    • The Dividend Cushion methodology helped us identify Hasbro as a better dividend growth idea than Mattel.
    • Hasbro's brand portfolio is top notch, and its 2015 movie slate is impressive.
    • Hasbro’s evolution into a branded and licensing powerhouse remains critical to our dividend-growth investment thesis on the firm.
  • Buffalo Wild Wings Owns The Next 'Chipotle'
    Fri, Aug. 22 BWLD 19 Comments

    Summary

    • Buffalo Wild Wings owns a little-known concept called PizzaRev that will do to pizza what Chipotle has done to burritos.
    • The beer, wings and sports concept continues to execute well, and its outlook is even better.
    • We continue to think Buffalo Wild Wings as a premier restaurant idea.
  • 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 2 Comments

    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 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 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 20 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 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.