Offshore
Photo
The Long Investor
$PLTR has exploded straight after its last two earnings reports and declined leading up to both reports too.
If history is repeating itself, then we expect the same reaction on the 6th of May.
Testing the 200 Day MA before this happens would be ideal at $18.70 https://t.co/aIlsVgVoHA
tweet
$PLTR has exploded straight after its last two earnings reports and declined leading up to both reports too.
If history is repeating itself, then we expect the same reaction on the 6th of May.
Testing the 200 Day MA before this happens would be ideal at $18.70 https://t.co/aIlsVgVoHA
$PLTR
Short term $29 PT
Longer term: $45 PT. https://t.co/SvLUlDgz9O tweet
Offshore
Video
The Long Investor
Let me be very clear here:
This is call exit liquidity so smart money can exit their positions because the rapid decline last week caught them off guard.
- Hot CPI
- US 10 YR rising
- conflict in the Middle East
- precious metals climbing
Was not part of the plan.
Every decline moves in 3 stages
Some call in the initial decline, dead cat bounce and then the final decline
We call it an ABC, 3 wave move.
Whatever you call it, it does not finish after 1 move down.
@fundstrat surprised at your โrallyโ comment without any context, rally followed by a decline is more appropriate
tweet
Let me be very clear here:
This is call exit liquidity so smart money can exit their positions because the rapid decline last week caught them off guard.
- Hot CPI
- US 10 YR rising
- conflict in the Middle East
- precious metals climbing
Was not part of the plan.
Every decline moves in 3 stages
Some call in the initial decline, dead cat bounce and then the final decline
We call it an ABC, 3 wave move.
Whatever you call it, it does not finish after 1 move down.
@fundstrat surprised at your โrallyโ comment without any context, rally followed by a decline is more appropriate
.@Fundstratโs Tom Lee on the markets: โNow we just need a positive catalyst. I think as long as inflation tracks better than expected, I think weโre in a good position to rally.โ https://t.co/DhzP7tQ5LL tweet
Offshore
Photo
๎จ Q-Cap ๎จ
S&P500 CY2014 EPS: $119.05
S&P500 CY2023 EPS: $220.17
10Y EPS growth: +84.94%
S&P500 Price CY2014: 2059.74
S&P500 Price CY2023: 4769.80
10Y Price growth: +131.57%
In the last 10Y, the S&P500 has gone up mainly based on multiple expansion largely driven by stock buybacks and dividends given money was essentially free.
If that math changes in the next decade, itโs gonna be hard to justify some of these valuations.
Also, Covid was obviously a black swan event, if you look at EPS from 2014 to Covid there was barely any growth in EPS on the S&P.
Money printing has essentially played a crucial part in earnings growth this past decade. However it comes with a steep price: sticky inflation.
Something tells me these inflation flares we keep seeing will not be so easily tamed in the future. Also, the game plan since the GFC has always been QE, and ZIRP but this is an unsustainable path.
Buying the index will never be the wrong thing to do. But the historical returns since the GFC that weโve been able to generate are likely a mirage of whatโs to come.
It should never feel easy to make money consistently and it surely felt like this since 2009.
tweet
S&P500 CY2014 EPS: $119.05
S&P500 CY2023 EPS: $220.17
10Y EPS growth: +84.94%
S&P500 Price CY2014: 2059.74
S&P500 Price CY2023: 4769.80
10Y Price growth: +131.57%
In the last 10Y, the S&P500 has gone up mainly based on multiple expansion largely driven by stock buybacks and dividends given money was essentially free.
If that math changes in the next decade, itโs gonna be hard to justify some of these valuations.
Also, Covid was obviously a black swan event, if you look at EPS from 2014 to Covid there was barely any growth in EPS on the S&P.
Money printing has essentially played a crucial part in earnings growth this past decade. However it comes with a steep price: sticky inflation.
Something tells me these inflation flares we keep seeing will not be so easily tamed in the future. Also, the game plan since the GFC has always been QE, and ZIRP but this is an unsustainable path.
Buying the index will never be the wrong thing to do. But the historical returns since the GFC that weโve been able to generate are likely a mirage of whatโs to come.
It should never feel easy to make money consistently and it surely felt like this since 2009.
tweet
Offshore
Video
The Long Investor
Let me be very clear here:
This is called exit liquidity so smart money can exit their positions because the rapid decline last week caught them off guard.
- Hot CPI
- US 10 YR rising
- conflict in the Middle East
- precious metals climbing
Was not part of the plan.
Every decline moves in 3 stages
Some call it the initial decline, dead cat bounce and then the final decline
We call it an ABC, 3 wave move.
Whatever you call it, it does not finish after 1 move down.
@fundstrat surprised at your โrallyโ comment without any context, rally followed by a decline is more appropriate
tweet
Let me be very clear here:
This is called exit liquidity so smart money can exit their positions because the rapid decline last week caught them off guard.
- Hot CPI
- US 10 YR rising
- conflict in the Middle East
- precious metals climbing
Was not part of the plan.
Every decline moves in 3 stages
Some call it the initial decline, dead cat bounce and then the final decline
We call it an ABC, 3 wave move.
Whatever you call it, it does not finish after 1 move down.
@fundstrat surprised at your โrallyโ comment without any context, rally followed by a decline is more appropriate
.@Fundstratโs Tom Lee on the markets: โNow we just need a positive catalyst. I think as long as inflation tracks better than expected, I think weโre in a good position to rally.โ https://t.co/DhzP7tQ5LL tweet
Offshore
Photo
๎จ Q-Cap ๎จ
$META is expected to make close to half a TRILLION $ in the next 6 years in Operating Income.
Zuck is 39 years old https://t.co/yiYC0x1chF
tweet
$META is expected to make close to half a TRILLION $ in the next 6 years in Operating Income.
Zuck is 39 years old https://t.co/yiYC0x1chF
tweet
Offshore
Photo
Dimitry Nakhla | Babylon Capitalยฎ
On July 24 2023, I shared my analysis on $CDNS suggesting it was overvalued at $241๐ต & a good consideration at $180๐ต
Since that post, $CDNS traded to $327๐ต ~35% higher and has come down & is now trading for $257๐ต after a 9.5% post-earnings drop
$CDNS serves as a prime example of the importance of discipline in investing, even when faced with an exceptional business. By maintaining a level head and avoiding the urge to invest at inflated prices, I avoided an โopportunity cost trapโ as $CDNS returned to its original price point
Moreover, recognizing $CDNS's overvaluation presented an opportunity to invest in other high-caliber business with a strong foundation for sustainable returns, driven by fundamental growth rather than mere multiple expansion
___
As I stated in my analysis:
โTake a look at the first photo (P/E chart) & youโll notice the severe multiple expansion in the last decade. $CDNS multiple more than doubled, increasing from ~18x in 2013 to ~47x today
In fact, $CDNS P/E chart almost mimics the stock price chart, implying that the stock price has run up way ahead of the fundamentals
So we must ask, is $CDNS worth a ~47 P/E? โฆ.
While $CDNS is a great business & runs the design software space along with $SNPS (part of the semiconductor ecosystem), I would not want my returns to rely on the premium 47x multiple being maintained while growth likely wonโt meet my 2G threshold
Iโd take a closer look at $CDNS if it comes down to a 34x P/E, or at $180๐ต per share based on todayโs fundamentals
If it never gets there, so be it. As a disciplined quality-value investor, I donโt chase stocks that trade well above what I believe is fair valueโ
#stocks #investing
___
๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ."
A sober valuation analysis on $CDNS ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 47.15x
โข10-Year Mean: 29.04x
โขNTM FCF Yield: 1.93%
โข10-Year Mean: 4.53%
As you can see, $CDNS appears to be trading above fair value
Going forward, investors can receive ~38% less in earnings per share & ~57% less in free cash flow per share*** ๐ง
Before we discuss valuation, letโs analyze why $CDNS is a high-quality business that should be on your radar
BALANCE SHEETโ
โขCash & Short-Term Inv: $916M
โขLong-Term Debt: $648M
$CDNS balance sheet is strong. The company has a BBB+ S&P Credit Rating
RETURN ON CAPITALโ
โข2017: 19.4%
โข2018: 23.5%
โข2019: 19.6%
โข2020: 22.0%
โข2021: 24.2%
โข2022: 29.5%
โขLTM: 30.0%
RETURN ON EQUITYโ
โข2017: 30.4%
โข2018: 58.3%
โข2019: 25.7%
โข2020: 25.7%
โข2021: 26.6%
โข2022: 31.0%
โขLTM: 30.0%
$CDNS return metrics are impressive, highlighting its financial efficiency
REVENUESโ
โข2012: $1.33B
โข2022: $3.56B
โขCAGR: 10.34%
FREE CASH FLOWโ
โข2012: $0.28B
โข2022: $1.12B
โขCAGR: 14.86%
NET INCOME๐
โข2012: $440M
โข2022: $849M
โขCAGR: 6.79%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 294.56M
โขLTM Shares Outstanding: 274.07M
โขShare Reduction: ~7%
By reducing its shares outstanding ~7% in the last 10 years, $CDNS has increased its [...]
On July 24 2023, I shared my analysis on $CDNS suggesting it was overvalued at $241๐ต & a good consideration at $180๐ต
Since that post, $CDNS traded to $327๐ต ~35% higher and has come down & is now trading for $257๐ต after a 9.5% post-earnings drop
$CDNS serves as a prime example of the importance of discipline in investing, even when faced with an exceptional business. By maintaining a level head and avoiding the urge to invest at inflated prices, I avoided an โopportunity cost trapโ as $CDNS returned to its original price point
Moreover, recognizing $CDNS's overvaluation presented an opportunity to invest in other high-caliber business with a strong foundation for sustainable returns, driven by fundamental growth rather than mere multiple expansion
___
As I stated in my analysis:
โTake a look at the first photo (P/E chart) & youโll notice the severe multiple expansion in the last decade. $CDNS multiple more than doubled, increasing from ~18x in 2013 to ~47x today
In fact, $CDNS P/E chart almost mimics the stock price chart, implying that the stock price has run up way ahead of the fundamentals
So we must ask, is $CDNS worth a ~47 P/E? โฆ.
While $CDNS is a great business & runs the design software space along with $SNPS (part of the semiconductor ecosystem), I would not want my returns to rely on the premium 47x multiple being maintained while growth likely wonโt meet my 2G threshold
Iโd take a closer look at $CDNS if it comes down to a 34x P/E, or at $180๐ต per share based on todayโs fundamentals
If it never gets there, so be it. As a disciplined quality-value investor, I donโt chase stocks that trade well above what I believe is fair valueโ
#stocks #investing
___
๐๐๐๐๐๐๐๐๐๐โผ๏ธ: ๐๐ก๐ข๐ฌ ๐ข๐ฌ ๐๐๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐. ๐๐๐๐ฒ๐ฅ๐จ๐ง ๐๐๐ฉ๐ข๐ญ๐๐ฅยฎ ๐๐ง๐ ๐ข๐ญ๐ฌ ๐ซ๐๐ฉ๐ซ๐๐ฌ๐๐ง๐ญ๐๐ญ๐ข๐ฏ๐๐ฌ ๐ฆ๐๐ฒ ๐ก๐๐ฏ๐ ๐ฉ๐จ๐ฌ๐ข๐ญ๐ข๐จ๐ง๐ฌ ๐ข๐ง ๐ญ๐ก๐ ๐ฌ๐๐๐ฎ๐ซ๐ข๐ญ๐ข๐๐ฌ ๐๐ข๐ฌ๐๐ฎ๐ฌ๐ฌ๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ.
๐๐ก๐ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ข๐ฌ ๐ข๐ง๐ญ๐๐ง๐๐๐ ๐๐จ๐ซ ๐ข๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง๐๐ฅ ๐ฉ๐ฎ๐ซ๐ฉ๐จ๐ฌ๐๐ฌ ๐จ๐ง๐ฅ๐ฒ ๐๐ง๐ ๐ฌ๐ก๐จ๐ฎ๐ฅ๐ ๐ง๐จ๐ญ ๐๐ ๐๐จ๐ง๐ฌ๐ญ๐ซ๐ฎ๐๐ ๐๐ฌ ๐ข๐ง๐ฏ๐๐ฌ๐ญ๐ฆ๐๐ง๐ญ ๐๐๐ฏ๐ข๐๐ ๐ญ๐จ ๐ฆ๐๐๐ญ ๐ญ๐ก๐ ๐ฌ๐ฉ๐๐๐ข๐๐ข๐ ๐ง๐๐๐๐ฌ ๐จ๐ ๐๐ง๐ฒ ๐ข๐ง๐๐ข๐ฏ๐ข๐๐ฎ๐๐ฅ ๐จ๐ซ ๐ฌ๐ข๐ญ๐ฎ๐๐ญ๐ข๐จ๐ง. ๐๐๐ฌ๐ญ ๐ฉ๐๐ซ๐๐จ๐ซ๐ฆ๐๐ง๐๐ ๐ข๐ฌ ๐ง๐จ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐ ๐จ๐ ๐๐ฎ๐ญ๐ฎ๐ซ๐ ๐ซ๐๐ฌ๐ฎ๐ฅ๐ญ๐ฌ.
๐๐ง๐๐จ๐ซ๐ฆ๐๐ญ๐ข๐จ๐ง ๐๐จ๐ง๐ญ๐๐ข๐ง๐๐ ๐ข๐ง ๐ญ๐ก๐ข๐ฌ ๐ญ๐ฐ๐๐๐ญ ๐ก๐๐ฌ ๐๐๐๐ง ๐จ๐๐ญ๐๐ข๐ง๐๐ ๐๐ซ๐จ๐ฆ ๐ฌ๐จ๐ฎ๐ซ๐๐๐ฌ ๐๐๐ฅ๐ข๐๐ฏ๐๐ ๐ญ๐จ ๐๐ ๐ซ๐๐ฅ๐ข๐๐๐ฅ๐, ๐๐ฎ๐ญ ๐ข๐ฌ ๐ง๐จ๐ญ ๐ ๐ฎ๐๐ซ๐๐ง๐ญ๐๐๐ ๐๐ฌ ๐ญ๐จ ๐๐จ๐ฆ๐ฉ๐ฅ๐๐ญ๐๐ง๐๐ฌ๐ฌ ๐จ๐ซ ๐๐๐๐ฎ๐ซ๐๐๐ฒ."
A sober valuation analysis on $CDNS ๐ง๐ฝโโ๏ธ
โขNTM P/E Ratio: 47.15x
โข10-Year Mean: 29.04x
โขNTM FCF Yield: 1.93%
โข10-Year Mean: 4.53%
As you can see, $CDNS appears to be trading above fair value
Going forward, investors can receive ~38% less in earnings per share & ~57% less in free cash flow per share*** ๐ง
Before we discuss valuation, letโs analyze why $CDNS is a high-quality business that should be on your radar
BALANCE SHEETโ
โขCash & Short-Term Inv: $916M
โขLong-Term Debt: $648M
$CDNS balance sheet is strong. The company has a BBB+ S&P Credit Rating
RETURN ON CAPITALโ
โข2017: 19.4%
โข2018: 23.5%
โข2019: 19.6%
โข2020: 22.0%
โข2021: 24.2%
โข2022: 29.5%
โขLTM: 30.0%
RETURN ON EQUITYโ
โข2017: 30.4%
โข2018: 58.3%
โข2019: 25.7%
โข2020: 25.7%
โข2021: 26.6%
โข2022: 31.0%
โขLTM: 30.0%
$CDNS return metrics are impressive, highlighting its financial efficiency
REVENUESโ
โข2012: $1.33B
โข2022: $3.56B
โขCAGR: 10.34%
FREE CASH FLOWโ
โข2012: $0.28B
โข2022: $1.12B
โขCAGR: 14.86%
NET INCOME๐
โข2012: $440M
โข2022: $849M
โขCAGR: 6.79%
SHARE BUYBACKSโ
โข2013 Shares Outstanding: 294.56M
โขLTM Shares Outstanding: 274.07M
โขShare Reduction: ~7%
By reducing its shares outstanding ~7% in the last 10 years, $CDNS has increased its [...]