[A few housekeeping items. First, our team is working through the valuation models for stocks in the Consumer Discretionary industry as we write, so we plan to publish a massive report refresh during the upcoming week or next weekend. As a result, we'll update the periodic screener not today, but next weekend to incorporate those expected refreshes. Most of you should be using the screener periodically in any case and not as a weekly trading mechanism. If you require anything in the meantime regarding our screening technology, however, please just let us know, and we can help you. Thank you so much for all your support. We really hope you continue to enjoy our work. Now check out this stat!]

By our calculations with YahooFinance data, the SPDR S&P 500 Trust ETF (SPY) is down 7% year-to-date, while the "cubes" (QQQ) is down 11.6% year-to-date, and the 60/40 stock/bond balanced portfolio (VBINX) is down 5.7%, the latter according to Morningstar data. The broader stock markets, as measured by the S&P 500, are coming off some awesome years of 28.6% in 2021, 18.3% in 2020, and 31.3% in 2019, so you might understand why my jaw dropped when I calculated the simulated outperformance of the Best Ideas Newsletter so far this year in 2022.

After being almost "fully invested" through most of the past three years, calling both the COVID-19 crash and pretty much the bottom (we'll spare you the details, as we've repeated ourselves far too many times), while staying bullish to this day, the simulated Best Ideas Newsletter portfolio is down just 3.9% on a "weighted" basis year-to-date. To have a process that has captured the upside of the bull market and its vicissitudes the past several years, and then to "outperform" a balanced 60/40 stock/bond portfolio with an all-equity portfolio during the worst January in stock market history, I'm simply at a loss for words.

Do you understand how amazing this stat is? All I can say is thank you so much for giving us a chance to showcase our process and how hard we work at Valuentum. In the image accompanying this commentary, you can see just how strong the "performance" of the ideas in the simulated Best Ideas Newsletter performed during the trading day on Friday, January 28. I feel like I could high-five you all right now! I'm seriously on cloud 9 right now. What an amazing start to 2022, and I'm overflowing with appreciation and gratefulness for your interest.

But as you might imagine, I just had to tell you this stat. I want you to know just how strong our ideas have been holding up among this market wreckage, after huge years in 2019, 2020, and 2021 -- even "beating" the 60/40 stock/bond balanced portfolios! May we all continue to do well! Please, do me a favor this weekend, and tell a friend about Valuentum. Godspeed and thank you!

Valuentum members have access to our 16-page stock reports, Valuentum Buying Index ratings, Dividend Cushion ratios, fair value estimates and ranges, dividend reports and more. Not a member? Subscribe today. The first 14 days are free.  

Image: Vertex Pharma continues to soar toward our fair value estimate. 

The biotech arena is difficult to navigate, which is why we tend to play it a bit more conservative than most. Vertex Pharma (VRTX) has an established, cash-flow generating portfolio of cystic fibrosis therapies, which has helped to establish a net cash rich balance sheet and a steady stream of robust free cash flow, unlike many biotechs that need external capital and are at risk of never reaching commercialization. We’re excited about Vertex’s clinical pipeline of potentially transformative genetic therapies, and we like its exposure to CRISPR gene-editing technology, which could be a huge business in the years ahead. Vertex Pharma remains our favorite biotech play and an idea in the simulated Best Ideas Newsletter portfolio.

[This note was released to members Saturday, January 22. It is reproduced here for the benefit of new members.]

Takeaways:

Image: Erica Nicol. 

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Brian Michael Nelson, CFA, is the president of equity and dividend growth research and ETF analysis at Valuentum Securities. He is the architect behind the company’s research methodology and processes, including the Valuentum Buying Index rating system, the Economic Castle rating, and the Dividend Cushion ratio. Nelson has acted as editor-in-chief of the firm’s Best Ideas Newsletter and Dividend Growth Newsletter since their inception. Before founding Valuentum in early 2011, he worked as a director at Morningstar, where he was responsible for training and methodology development within the firm's equity and credit research department. Prior to that position, Nelson served as a senior industrials securities analyst covering aerospace, airline, construction, and environmental services companies. Before joining Morningstar in February 2006, he worked for a small capitalization fund covering a variety of sectors for an aggressive growth investment management firm in Chicago. Nelson holds a bachelor's degree in finance with a minor in mathematics, magna cum laude, from Benedictine University, and an MBA from the University of Chicago Booth School of Business. He also holds the chartered financial analyst (CFA) designation.

Video: 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.

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 info@valuentum.com. 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.