⁠Lumida Wealth Management
1/ Daily News Round-Up:

- Alimentation Couche-Tard eyes 7-Eleven acquisition.
- Deutsche Bank sees labor market as key to Fed’s rate decision.
- Bitcoin dips below $63K.
- Zuckerberg claims Biden admin pressured Meta on COVID-19 content.
- Emerging-market stocks tumble.
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⁠Invest In Assets 📈
Terry Smith on Quality vs. Value Investing: https://t.co/XNV4chXBT5
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⁠Quality Stocks
💰 I just added a new position in my small-cap portfolio and reinforced one

It is a very small cap (around $100M). Only 2 spots still available for new opportunities as I want 15 stocks max

💡 Are you currently buying new stocks? https://t.co/aIk53j0Evr
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⁠Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $UNH 🧘🏽‍♂️

•NTM P/E Ratio: 20.06x
•5-Year Mean: 19.83x

•NTM FCF Yield: 5.21%
•5-Year Mean: 5.77%

As you can see, $UNH appears to be trading near fair value

Going forward, investors can receive ~1% LESS in earnings per share & ~10% LESS in FCF per share 🧠***

Before we get into valuation, let’s take a look at why $UNH is a great business

BALANCE SHEET✅
•Cash & Total Inv: $77.44B
•Long-Term Debt: $63.73B

$UNH has a strong balance sheet, an A+ S&P Credit Rating & ~3x FFO Interest Coverage

RETURN ON CAPITAL✅
•2019: 18.6%
•2020: 19.1%
•2021: 19.1%
•2022: 19.4%
•2023: 19.1%
•LTM: 18.0%

RETURN ON EQUITY✅
•2019: 24.1%
•2020: 23.8%
•2021: 24.1%
•2022: 25.4%
•2023: 25.0%
•LTM: 15.6%

$UNH has strong return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2013: $122.49B
•2023: $371.62B
•CAGR: 11.73%

FREE CASH FLOW✅
•2013: $5.68B
•2023: $25.68B
•CAGR: 16.28%

NORMALIZED EPS✅
•2013: $5.50
•2023: $25.12
•CAGR: 16.40%

PAID DIVIDENDS✅
•2013: $1.05
•2023: $7.29
•CAGR: 21.38%

SHARE BUYBACKS✅
•2013 Shares Outstanding: 1.02B
•LTM Shares Outstanding: 0.93B

By reducing its shares outstanding ~8.8%, $UNH increased its EPS by ~9.6% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 14.6%
•LTM Operating Margins: 8.3%
•LTM Net Income Margins: 3.7%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~1% LESS in EPS & ~10% LESS in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $UNH has to grow earnings at a 10.03% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be more than the (10.03%) required growth rate:

2024E: $27.69 (10.2% YoY) *FY Dec
2025E: $31.16 (12.5% YoY)
2026E: $35.15 (12.8% YoY)

$UNH has an excellent track record of meeting analyst estimates ~2 years out, so let’s assume $UNH ends 2026 with $35.15 in EPS & see its CAGR potential assuming different multiples

20x P/E: $703.00💵 … ~9.4% CAGR

19x P/E: $667.85💵 … ~7.1% CAGR

18x P/E: $632.70💵 … ~4.7% CAGR

As you can see, $UNH appears to have attractive return potential even if we assume >20x earnings (a multiple slightly above both its 5-year & 10-year mean)

While this is a solid rate of return for an excellent capital allocator & wide-moat recession-proof business like $UNH, it doesn’t warrant a purchase today as we are left with no margin of safety

Today at $587💵 $UNH appears to be a “hold” … $UNH is not immune to political risk & even just the perceived political risks can (and has many times in the past) occasionally bring its multiple down well below <18.00x

$unh appears to be a good buy closer to $535💵 or near 18.25x ntm earnings (~9% below today’s price)

at $535💵 we can reasonably expect a cagr of ~11.43% while assuming a 19x multiple

#stocks #investing
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𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.

𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.

𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
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⁠Stock Analysis Compilation
Madison Funds on Deere & co $DE US

Thesis: Deere's leadership in precision agriculture technology and its expanding high-margin software services position it for long-term growth, making current market conditions an attractive entry point

(Extract from their Q2 letter) https://t.co/pJsrctBh3M
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⁠Librarian Capital
Altria $MO NJOY initial defeat in Juul patent suit at ITC

Judge "provided notice of her initial determination supporting JUUL’s allegations", "recommending an exclusion order that would prohibit the importation of NJOY ACE into the US"

"The parties have engaged with a mediator" https://t.co/xL0gH0DC6U
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⁠Bourbon Capital
$JD Announces $5 Billion Share Buyback

$JD its up 3.37% pre market https://t.co/CMgCP2xujh
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⁠Quality Stocks
🧵 A thread about Sin Stocks

👿 Sin Stocks refer to companies involved in unethical activities. Of course, there is a lot of subjectivity to define the list.

👇 However, I will present with examples 6️⃣ industries in this category.

Do you own Sin Stocks?
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⁠Bourbon Capital
Good Morning, i hope you are having a good day so far

The following companies just reported earnings:

$BMO Bank of Montreal -2.33%🔴
$BNS Bank of Novo Scotia -1.71%🔴
$WDS Woodside Energy Group +2.12%🟢
$CDLR Cadeler -2.16%🔴
$AMWD American Woodmark -12.83%🔴
$SCSC ScanSource -4.31%🔴
$HDL Super Hi International Holding +3.45%🟢
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⁠Quality Stocks
🇳🇴 Smartcraft $SMCRT Q2 24 results

Revenue 133M NOK
Q2 23 101M NOK +32% 🟢
Est. 129M NOK beat 🟢

EPS 0.16NOK
Q2 23 0.17NOK -6% 🔴
Est. 0.20NOK miss 🔴

2 new acquisitions with a strong impact on ARR
R&D expenses continue to grow but diminution in % of revenues
Estimated TAM above 50B NOK
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