Image: When data-driven, DCF-backed undervalued stocks break out of downtrends, they are called Valuentum stocks! Newsletter portfolio holding Exxon Mobil looks very attractive these days.
At Valuentum, we strive to stand out from the crowd. Most investment research publishers fall into a few camps, whether it be value, growth, income, momentum, chartist or some variant of the aforementioned. We think each in its own right holds merit, but the combination of these approaches is even more powerful. After all, stock price movements aren’t just driven by investors of the value or growth variety, but by all market participants. Therefore, we look at stocks from a variety of investment perspectives in order to better understand and capitalize on opportunities. We want to provide our clients and subscribers with relevant information to make the best decision possible.
Though the breadth of our analysis is large, the core of our process centers on in-depth discounted cash flow analysis and the concept of a margin of safety (invented by Benjamin Graham and embraced by Warren Buffett and Valuentum). In our 16-page stock reports, we offer a fair value estimate for each company and assess the attractiveness of the firm's valuation based on its respective margin of safety. We also provide a relative valuation assessment in the context of the firm’s industry and peers. A cross section of our ValueCreation and ValueRisk ratings provides a financial assessment of a company’s business quality and competitive advantages, while our ValueTrend and Economic Castle ratings offer insight into the trajectory of a firm’s economic profit creation (ROIC versus WACC).
Our analysis doesn’t stop there. We offer a technical evaluation of the stock as well as an assessment of other momentum indicators. We not only want to reveal to investors which firms are undervalued (both on a discounted cash flow and relative value basis), in our view, but we also want to provide investors with the information needed to anticipate entry and exit points. Most investment research publishers focus on arriving at a target price or fair value estimate, but fall short of providing a technical or momentum assessment to bolster consider buying and consider selling disciplines. We go the distance and strive to provide investors with answers--not half the story.
An explanation of our approach would not be complete if we didn’t describe our ideal stock idea. We’re looking for companies that are undervalued--both on a discounted cash flow basis and versus peers--have strong growth potential, have a solid track record of creating economic profits for shareholders with reasonable risk, are strong cash flow generators, have manageable financial leverage, and are currently showing bullish technical and momentum indicators (and a nice, strong and growing dividend, too!). Exxon Mobil (XOM) is included as a "weighting" in the Dividend Growth Newsletter portfolio, the Best Ideas Newsletter portfolio, and the High Yield Dividend Newsletter portfolio.
Though we're committed to supporting investors of all styles, our favorite ideas are always included in the simulated newsletter portfolios -- the Best Ideas Newsletter portfolio or the Dividend Growth Newsletter portfolio, for example. When ideas are entered into the newsletter portfolios, these favorite ideas typically (but not always) register a 9 or 10 (a high rating) on the Valuentum Buying Index, our stock-selection methodology. We also provide dividend reports and calculate a company's forward-looking, cash-flow based measure of dividend health, the Dividend Cushion ratio, to offer a unique picture of the investment opportunity, from value through momentum investing!
The regular premium membership plan offers access to the Valuentum website and includes both the Best Ideas Newsletter and Dividend Growth Newsletter (each delivered monthly). The newsletter portfolios showcase how we put the fair value estimate, fair value range, Valuentum Buying Index, and Dividend Cushion ratio, among other metrics, into practice for each respective strategy! The High Yield Dividend Newsletter, the Valuentum Exclusive publication, the ESG Newsletter, and the additional options commentary are other valuable add-on features to any membership.
As market volatility continues to reach unprecedented levels, options trading has taken the industry by storm. Learn more about adding Valuentum's additional options commentary to your membership here.
Are your clients interested in ESG investing or are you looking to gain insights into this fast-growing area. Please consider adding the ESG Newsletter to your membership here.
Hope you continue to enjoy our work!
Kind regards,
The Valuentum Team
www.valuentum.com
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Happy New Year!
January 1 was Dividend Growth Newsletter day!
For new members, the Dividend Growth Newsletter is released on the first of every month. In it, the Dividend Growth Newsletter portfolio puts into practice our rigorous valuation and dividend growth frameworks and can be found on page 5 of each monthly edition.
To access our commentary, reports and analysis on ideas in the portfolio of the Dividend Growth Newsletter (as well as each company's 16-page Stock Report and Dividend Report), please be sure use Valuentum's 'Symbol' search box in its website header. Enter the ticker symbol or search via keyword (with the dropdown menu).
The Dividend Cushion ratio is a proprietary metric that many Valuentum members use to assess the financial capacity of a company to keep growing its dividend long into the future. The Dividend Cushion ratio is also used in assessing the durability of the dividend and the probability that it might be cut in the future.
We estimate the efficacy of the Dividend Cushion ratio at predicting a dividend cut at ~90%. This ratio, as well as much of our other data, including the fair value estimate, ratings and other metrics can be downloaded on our website here (xls) -- [login required] , updated periodically (generally on Sunday evenings, but if we have material updates, it would be early in the following week).
We use both qualitative and quantitative analysis in our process, and we update the reports on the website frequently, announcing changes via articles scrolling down the middle of our website, but also within the 'Valuations' section of the Valuentum Weekly, an email we release on Sunday (note, however, we won't have one tomorrow due to the New Year's holiday weekend).
We publish the updates on our website first. For example, we published the refresh article on our website regarding the REITs on December 6, saying that we had refreshed the REIT reports for your review. Our Reports on the Real Estate Investment Trusts (REITs) >>. Be sure to also read the 'On Deck' section near the bottom of the Valuentum Weekly email so you know what to expect from us in the coming weeks.
For dividend growth investors, there's a lot to look through -- the newsletters, reports, ratings, the Dividend Cushion ratio, and valuation process are but a few items that may be of interest. We also provide an expansive quarterly DataScreener that is available at the beginning of each calendar quarter, too, among ongoing commentary and market and individual stock updates (published on our website and sometimes also released by email).
For investors seeking higher yielding ideas and elevated income considerations, we also provide a High Yield Dividend Newsletter and an income idea in the Exclusive publication to those that are also members to those products. If you're not aware of the High Yield Dividend Newsletter or the Exclusive publication, please inquire about them. We release the Best Ideas Newsletter and add-on ESG Newsletter on the 15th of each month.
We hope you continue to enjoy all of what we have to offer at Valuentum!
If you are having trouble downloading the link to the pdf of the January edition of the Dividend Growth Newsletter, please copy and paste the following link into your browser:
https://www.valuentum.com/downloads/20220102/download
Happy New Year!
Kind regards,
The Valuentum Team
www.valuentum.com
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Valuentum's President Brian Michael Nelson, CFA, explains why investors should not fear inflation, why government agencies such as the Fed and Treasury are prioritizing something other than price discovery, why the 10-year Treasury rate is a must-watch metric, and why Valuentum prefers the moaty constituents in large cap growth due to their net cash rich balance sheets, tremendous free cash flow generating potential, and secular growth tailwinds.
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Happy New Year!
A Look Back at the Last 5 Years: Bitcoin and speculative stocks labeled as disruptive innovators dominated the return landscape the past 5 years, but the categories of large cap growth and ESG didn't disappoint, nor did moat-oriented stocks and U.S. stocks, more generally. The category of small cap value, bonds, Chinese equities, and the energy complex suffered greatly the past 5 years. We continue to like the net cash rich, free cash flow generating, secular growing powerhouses found within the area of U.S. large cap growth.
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"What if I told you that almost everything you know about finance is wrong? The book Value Trap is the finance and valuation course you didn't get in school," President of Investment Research at Valuentum Brian Nelson says.
"The field needs to be almost entirely redefined in a forward-looking manner. Historical data is useless when it comes to asset pricing. It is future expectations that matter. In the age of Big Data, there may be no better book to guide investors than Value Trap."
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Contact Us
Valuentum Securities, Inc.
www.valuentum.com
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This email, its contents, and the reports or articles (links) or comments referenced or attached in this email are for information purposes only and should not be considered a solicitation to buy or sell any security. Valuentum is not responsible for any errors or omissions or for results obtained from the use of the reports, articles, Best Ideas Newsletter, Dividend Growth Newsletter, Valuentum Exclusive publication, or any other communication and accepts no liability for how readers may choose to utilize the content. Assumptions, opinions, and estimates are based on our judgment as of the date of the reports or articles and are subject to change without notice. For more information about Valuentum and the products and services it offers, please contact us at [email protected]. The Best Ideas Newsletter portfolio and Dividend Growth Newsletter portfolio are not real money portfolios. Any performance, including that in the Valuentum Exclusive publication, is hypothetical and does not represent actual trading. Past simulated performance, back-tested or walk-forward or other, is not a guarantee of future results. Valuentum is not a money manager, is not a registered investment advisor, and does not offer brokerage or investment banking services. Valuentum is an investment research publishing company. No warranty or guarantee may be created or extended by sales or promotional materials, whether by email or in any other format. Further, this e-mail and attachments relating thereto, is intended for the abovementioned recipient. If you have received this e-mail in error, kindly notify the sender and delete it immediately as it contains information relating to the official business of Valuentum Securities Inc, which is confidential, legally privileged and proprietary to Valuentum Securities Inc.
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