RJ Towner

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  • What’s Going on in the Time Warner-CBS Battle?

    By RJ Towner - August 15, 2013 | Tickers: CBS, DTV, TWC

    A few weeks ago, CBS (NYSE: CBS) and Time Warner Cable (NYSE: TWC) took their disagreement over carriage fees to another level, as both firms’ existing carriage fee agreement expired, effectively blacking out Time Warner subscribers from viewing the network.

    Since then, Valuentum has seen really no signs of the companies coming to any sort of agreement. The Federal Communications Commission (FCC) warned on August 9 that, if the two more »

  • Exxon Misses, ConocoPhillips Raises Production, and Shell Writes Down North American Shale Assets

    By RJ Towner - August 6, 2013 | Tickers: BP, CVX, COP, XOM

    As Valuentum followers are aware, Valuentum thinks the oil majors each have their own respective strengths and weaknesses. Exxon Mobil (NYSE: XOM) has consistently earned the best economic returns (ROCE) among peers, but its stock price is rich, trading at the high end of our fair value estimate range (at the time of this writing). ConocoPhillips (NYSE: COP) continues to raise its production forecasts and is the second-best value-creator (ROCE more »

  • The Dangers of BDCs

    By RJ Towner - June 28, 2013 | Tickers: MAIN, TCAP

    It almost goes without saying that the biggest threat to BDC profitability is movement in interest rates—and not just in one direction. With interest rates collapsing over the past several years, investors of all types have been forced to chase riskier assets for yield. This means that new competitors have emerged in the form of hedge funds and other investors seeking to finance lower-middle market and middle-market businesses.

    Triangle more »

  • If Yields Go up, Are BDCs Done For?

    By RJ Towner - June 24, 2013 | Tickers: ACAS, ARCC, MAIN, TCAP

    We  at Valuentum continue to monitor developments at business development companies (BDCs), particularly industry bellwether Main Street (NYSE: MAIN). In February, we penned a profile of Main Street, and we added the firm to our Dividend Growth Newsletter watch-list (not portfolio) at the time. With shares of Main Street getting clobbered in the past few days, let’s take a deeper dive into the sector's opportunities and risks.

    What more »

  • Is BHP Billiton Jumping Into the Potash Market?

    By RJ Towner - June 20, 2013 | Tickers: AGU, BHP, POT, MOS

    Last week, rumors intensified regarding mining giant BHP Billiton (NYSE: BHP) and the firm’s prospective entry into the potash market. Because demand for potash (see image below) tends to be a bit more stable than the company’s other resources (namely iron ore), Valuentum can see why BHP would be interested in entering the market.

    Image Source: Potash

    As it is currently structured, the potash market is dominated by more »

  • Does ShopHouse Justify Chipotle’s Valuation?

    By RJ Towner - June 20, 2013 | Tickers: CMG, MCD

    After its price finally came down to earth in late 2012 (falling to under $250 from over $400 per share), shares of quick-serve burrito restaurant Chipotle (NYSE: CMG) have rocketed back toward the $400 level. Shares have jumped 23% year-to-date, even though the company’s same-store sales growth totaled just 1% in the first quarter. Shares now trade at a premium to Valuentum's fair value estimate ($338 per share more »

  • DirecTV Is on the Verge of Acquiring Hulu

    By RJ Towner - June 19, 2013 | Tickers: BRK-A, DTV, DISH, NFLX

    Valuentum Best Ideas Newsletter holding DirecTV (NASDAQ: DTV) is allegedly in advanced talks to close a deal with internet TV provider Hulu. The source asserts that the deal will be in the billion-dollar range. Hulu posted approximately $695 million in revenue in 2012, and people watched 24 billion minutes of entertainment on the service last year. Yet, we at Valuentum do not know what the bottom-line looks like. This valuation more »

  • Sprint, Dish, Clearwire, and SoftBank: The Saga Continues

    By RJ Towner - June 18, 2013 | Tickers: CLWR, DISH, S, VZ

    Key Takeaways:

    • The entire Sprint/Clearwire/Dish/SoftBank situation is very complicated.
    • We believe SoftBank’s offer makes more sense for Sprint’s near-term future.
    • However, we like the well-rounded package that a combined Sprint/Dish entity would be able to offer consumers over the long haul, and we tend to have faith in skilled managers like Dish’s CEO Ergen.
    • In any case, we think the saga will eventually more »
  • The US Auto Recovery Is Unshakeable

    By RJ Towner - June 7, 2013 | Tickers: F, GM, HMC, TM

    As the housing market recovery in the US appears more sustainable, US auto sales continue to gain steam. Low-end luxury is performing exceptionally well, as is the pickup segment—a likely result of the housing recovery.

    Let’s take a look at results from the industry.

    Ford

    Valuentum's Best Ideas Newsletter holding Ford (NYSE: F) posted a spectacular May, exceeding consensus estimates with unit sales surging 14% year-over-year to more »

  • 2 Huge Deals as M&A Accelerates

    By RJ Towner - June 6, 2013 | Tickers: CRM, SFD, VRX

    In one of the more surprising deals in some time, pork producer Smithfield Foods (NYSE: SFD) sold itself to Chinese meat producer Shuanghui International for $4.7 billion, or $34 per share in cash. The price represents a 31% premium to the previous day’s closing price. While American pork consumption languishes, the Chinese have a healthy appetite for the meat. Shuanghui will be able to take excess pork supply more »

  • How to Profit From the Upcoming M&A Boom?

    By RJ Towner - June 5, 2013 | Tickers: SAM, DECK, MDLZ, PEP, TIF

    In spite of low interest rates, rising equity prices, and general economic improvement, mergers and acquisition activity has remained relatively weak for the past few years. Although we have seen a few deals surface this week, we, at Valuentum, believe activity could accelerate in the coming months, especially if companies begin to recognize the possibility of rising interest rates, as outlined in the following piece: “The Impact of the US more »

  • Sporting Goods Weak…Weather to Blame?

    By RJ Towner - May 31, 2013 | Tickers: DKS, HIBB

    After performing well since the Great Recession, sporting goods retailers posted weak same-store sales for the first quarter. Let’s take a look at the performance of Hibbett Sports (NASDAQ: HIBB) and Dick’s Sporting Goods (NYSE: DKS).

    Hibbett Sports

    Hibbett Sports has performed exceptionally well during the past five years, with shares up over 170% (shares are up less than 3% during the past year, however). Even though the more »

  • Mixed Results From Retail's Best

    By RJ Towner - May 31, 2013 | Tickers: JWN, TJX, URBN

    The first quarter earnings season for retail has certainly been a bit of a mixed bag. Two of the largest retailers in the US, Wal-Mart and Target, reported negative same-store sales revealing cautious spending patterns from American consumers. On the other hand, home improvement giant Home Depot registered wonderful sales gains as the firm continues to ride the housing recovery. Let’s take a look at the results of some more »

  • Facebook and LinkedIn Early in Monetization; Neither a Bargain

    By RJ Towner - May 9, 2013 | Tickers: FB, GOOG, LNKD

    During the past week, publicly traded social media giants Facebook (NASDAQ: FB) and LinkedIn (NYSE: LNKD) both reported strong first quarter results. Facebook’s revenue grew 38% year-over-year to $1.46 billion, exceeding consensus estimates, while earnings per share were flat at $0.12. LinkedIn’s revenue surged 72% year-over-year to $325 million driving earnings per share of $0.45—both figures were handily better than consensus expectations.

    Cash flow more »

  • Tony Stark Gives Disney a Boost

    By RJ Towner - May 8, 2013 | Tickers: CBS, DIS

    Media stocks have been on a fantastic run as of late, and the trend looks to continue after CBS (NYSE: CBS) posted great results and Disney's (NYSE: DIS) Iron Man 3 put up a blockbuster debut at the box office internationally and domestically. Let’s take a look at these recent events.

    CBS

    CBS posted strong first quarter results, driven by a 6% year-over-year increase in revenue to $4 more »

  • Caterpillar’s 2013 Doesn’t Look Great

    By RJ Towner - April 26, 2013 | Tickers: BHP, CAT, JOY, RIO

    Global equipment manufacturer Caterpillar (NYSE: CAT) posted weak first quarter results on the back of a decline in global mining capital expenditures. Revenue dropped 17% year-over-year to $13.2 billion, which was slightly below consensus expectations. Earnings tumbled 45% year-over-year to $1.31 per share, which was also worse than consensus estimates.

    The decline during the first quarter wasn’t much of a surprised as the outlook for mining capital more »

  • Yahoo: The Turnaround

    By RJ Towner - April 17, 2013 | Tickers: AAPL, GOOG, JCP, YHOO

    Internet search and content provider Yahoo (NASDAQ: YHOO) reported first quarter results that were relatively mediocre. Revenue ex-TAC (excluding traffic acquisition costs) was flat year-over-year, falling short of consensus estimates. Earnings per share easily exceeded consensus expectations, rising 52% year-over-year to $0.35. Yahoo provided non-GAP earnings per share of $0.38 that excluded $0.38 of stock-based compensation.

    Unfortunately for shareholders, the EPS increase was mostly the result of more »

  • Shares of Baidu Are Just Too Cheap

    By RJ Towner - April 12, 2013 | Tickers: AAPL, BIDU, GOOG, QIHU

    Valuations for internet technology companies are literally all over the place. On one end of the spectrum sits LinkedIn and Amazon—fast growing firms with sky-high PE multiples and tremendous credit given to the long run. On the other end, we have Apple (NASDAQ: AAPL) generating fantastic amounts of free cash flow, and trading with single-digit forward PE multiples. Chinese search giant Baidu (NASDAQ: BIDU)falls closer to Apple, and more »

  • GE Pays Up for Fracking Exposure

    By RJ Towner - April 10, 2013 | Tickers: GE, JOY, LUFK.DL

    The Wall Street Journal reported earlier this week that GE (NYSE: GE) will acquire oil pump manufacturer Lufkin Industries (UNKNOWN: LUFK.DL) for a whopping $3.3 billion, or $88.50 per share in cash. Paramount to any acquisition is the price paid, and we at Valuentum think GE paid a hefty sum to gain exposure to the US hydraulic fracturing market, paying a 20% premium to the high end of more »

  • GE Pays Up For Fracking Exposure

    By RJ Towner - April 8, 2013 | Tickers: GE, JOY, LUFK.DL

    Earlier this morning, The Wall Street Journal reported that GE (NYSE: GE) will acquire oil pump manufacturer Lufkin Industries (UNKNOWN: LUFK.DL) for a whopping $3.3 billion, or $88.50 per share in cash. Paramount to any acquisition is the price paid, and we think GE paid a hefty sum to gain exposure to the US hydraulic fracturing market, paying a 20% premium to the high-end of Valuentum's fair more »

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