The Few Bets That Matter
How long before we accept that a stock just isn’t ready to go higher?
Every day, hundreds tell you to buy $ADBE $DUOL $HIMS $UNH $NFLX $PYPL & co.
Yet they keep printing yearly lows. Which gives them even more attention.
People love losers. And being down 50% apparently.
tweet
How long before we accept that a stock just isn’t ready to go higher?
Every day, hundreds tell you to buy $ADBE $DUOL $HIMS $UNH $NFLX $PYPL & co.
Yet they keep printing yearly lows. Which gives them even more attention.
People love losers. And being down 50% apparently.
https://t.co/gymKiwJpsu tweet
X (formerly Twitter)
The Few Bets That Matter (@WealthyReadings) on X
The FinX Darlings & Why Not to Buy Them
Offshore
Photo
Quiver Quantitative
JUST IN: Here are the members of Congress who have made the most in the stock market over the last week, per our estimates.
Pelosi is up $3.5M, more than 20 times her annual salary.
Track their portfolios live on Quiver: https://t.co/8zxlvTUFKc
tweet
JUST IN: Here are the members of Congress who have made the most in the stock market over the last week, per our estimates.
Pelosi is up $3.5M, more than 20 times her annual salary.
Track their portfolios live on Quiver: https://t.co/8zxlvTUFKc
tweet
Offshore
Photo
Fiscal.ai
Reminder: Amazon owns a ~15% stake in Anthropic, the parent company behind Claude.
Earlier this month, Anthropic announced they were raising money at a $350B valuation.
$AMZN https://t.co/dLbVo39wi4
tweet
Reminder: Amazon owns a ~15% stake in Anthropic, the parent company behind Claude.
Earlier this month, Anthropic announced they were raising money at a $350B valuation.
$AMZN https://t.co/dLbVo39wi4
tweet
Offshore
Photo
Clark Square Capital
Strategic Cap has 6 proposals for Gungho's annual meeting in March.
The two most important: 1) calls for a repurchase of Taizo Son's shares, or >20% of shares outstanding, and 2) calls for a special dividend of 20% of Gungho's cash.
Bodes well for a return of cap at $GRVY
Link: https://t.co/Y5cL8mEYTX
tweet
Strategic Cap has 6 proposals for Gungho's annual meeting in March.
The two most important: 1) calls for a repurchase of Taizo Son's shares, or >20% of shares outstanding, and 2) calls for a special dividend of 20% of Gungho's cash.
Bodes well for a return of cap at $GRVY
Link: https://t.co/Y5cL8mEYTX
tweet
Offshore
Photo
The Few Bets That Matter
$PATH is reaching maximum opportunity.
I doubled my position and added long-term options.
The company is at an inflection point. ARR is starting to accelerate, guidance points to it being a trend, not a one-time event.
AI services that actually improve workflows are the next leg of AI growth. They’re still rare but overly valubale to companies who struggle to improve further without advanced technologies; $PATH is one of them.
Valuation is attractive below 5x sales for 15%+ growth, with signs of acceleration. AI software growing above 20% trades closer to 8x sales or more, higher with growth acceleration.
Price action is also in the best spot based on earlier behavior: last time price bounced on the weekly 50 it bounced 50%+. This has to be the bottom to keep the uptrend.
Fundamentals are strong. Valuation is healthy. Price action is clean.
If we don’t go big when these opportunities show up, we never do.
tweet
$PATH is reaching maximum opportunity.
I doubled my position and added long-term options.
The company is at an inflection point. ARR is starting to accelerate, guidance points to it being a trend, not a one-time event.
AI services that actually improve workflows are the next leg of AI growth. They’re still rare but overly valubale to companies who struggle to improve further without advanced technologies; $PATH is one of them.
Valuation is attractive below 5x sales for 15%+ growth, with signs of acceleration. AI software growing above 20% trades closer to 8x sales or more, higher with growth acceleration.
Price action is also in the best spot based on earlier behavior: last time price bounced on the weekly 50 it bounced 50%+. This has to be the bottom to keep the uptrend.
Fundamentals are strong. Valuation is healthy. Price action is clean.
If we don’t go big when these opportunities show up, we never do.
https://t.co/BXN5Zt5Gvr tweet
Offshore
Photo
Quiver Quantitative
In case you're wondering where personal financial incentives lie for many politicians:
The annual salary for a member of Congress is $174K
There are already dozens of members who have made more than $174K in the stock market so far this year.
We are just 27 days into the year. https://t.co/eSYnos4yCn
tweet
In case you're wondering where personal financial incentives lie for many politicians:
The annual salary for a member of Congress is $174K
There are already dozens of members who have made more than $174K in the stock market so far this year.
We are just 27 days into the year. https://t.co/eSYnos4yCn
tweet
Offshore
Photo
Dimitry Nakhla | Babylon Capital®
Less than 9 months ago, $ASML traded for ~26x NTM earnings & $687💵 — it’s always amazing how quickly sentiment can change.
A quality valuation analysis on $ASML 🧘🏽♂️
•NTM P/E Ratio: 26.34x
•10-Year Mean: 31.08x
•NTM FCF Yield: 3.39%
•10-Year Mean: 3.09%
As you can see, $ASML appears to be trading below fair value
Going forward, investors can receive ~18% MORE in earnings per share & ~10% MORE in FCF per share🧠***
Before we get into valuation, let’s take a look at why $ASML is an excellent business (*Financials in USD*)
BALANCE SHEET✅
•Cash & Short Term Inv: $9.85B
•Long-Term Debt: $3.98B
$ASML has a strong balance sheet & 70x FFO Interest Coverage
RETURN ON CAPITAL✅
•2021: 43.8%
•2022: 48.0%
•2023: 48.7%
•2024: 38.3%
•LTM: 48.2%
RETURN ON EQUITY✅
•2021: 49.0%
•2022: 59.4%
•2023: 70.4%
•2024: 47.4%
•LTM: 55.6%
$ASML has excellent return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2014: $7.09B
•2024: $29.28B
•CAGR: 15.23%
FREE CASH FLOW*
• $ASML FCF is very sporadic due to heavy capital expenditures & isn’t necessarily the most reliable way to analyze the company’s value
NORMALIZED EPS✅
•2014: $3.15
•2024: $20.03
•CAGR: 20.31%
SHARE BUYBACKS✅
•2018 Shares Outstanding: 426.40M
•LTM Shares Outstanding: 393.30M
By reducing its shares outstanding ~7.7%, $ASML increased its EPS by ~8.3% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 52.0%
•LTM Operating Margins: 33.8%
•LTM Net Income Margins: 28.3%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~18% MORE in EPS & 10% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $ASML has to grow earnings at a 13.17% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be more than the (13.17%) required growth rate:
2025E: $26.60 (21.6% YoY) *FY Dec
2026E: $30.75 (15.6% YoY)
2027E: $37.29 (20.7% YoY)
$ASML has a decent track record of meeting analyst estimates ~2 years out. HOWEVER, let’s be conservative & assume $ASML ends 2027 with $35.00*** in EPS (~6% below current estimates) & see its CAGR potential assuming different multiples:
29x P/E: $1,015💵 … ~17.0% CAGR
28x P/E: $980💵 … ~15.4% CAGR
27x P/E: $945💵 … ~13.9% CAGR
26x P/E: $910💵 … ~12.3% CAGR
25x P/E: $875💵 … ~10.7% CAGR
As you can see, $ASML appears to have attractive return potential EVEN if we assume greater or equal to 25x EPS (below its 10-year mean, current multiple, & justified given its quality, moat & growth rate)
Today at $687💵 $ASML appears to be a strong consideration for investment, albeit with extreme volatility
Additionally, we have some margin of safety by relying on a lower multiple & lower growth rate
As I’ve stated before, given its volatility, however, it’s wise to piece into $ASML — this way, you enhance your margin of safety while also positioning yourself to “win-win” if the stock moves up or down in the short-term 💵
#stocks #investing
___
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, 𝐛[...]
Less than 9 months ago, $ASML traded for ~26x NTM earnings & $687💵 — it’s always amazing how quickly sentiment can change.
A quality valuation analysis on $ASML 🧘🏽♂️
•NTM P/E Ratio: 26.34x
•10-Year Mean: 31.08x
•NTM FCF Yield: 3.39%
•10-Year Mean: 3.09%
As you can see, $ASML appears to be trading below fair value
Going forward, investors can receive ~18% MORE in earnings per share & ~10% MORE in FCF per share🧠***
Before we get into valuation, let’s take a look at why $ASML is an excellent business (*Financials in USD*)
BALANCE SHEET✅
•Cash & Short Term Inv: $9.85B
•Long-Term Debt: $3.98B
$ASML has a strong balance sheet & 70x FFO Interest Coverage
RETURN ON CAPITAL✅
•2021: 43.8%
•2022: 48.0%
•2023: 48.7%
•2024: 38.3%
•LTM: 48.2%
RETURN ON EQUITY✅
•2021: 49.0%
•2022: 59.4%
•2023: 70.4%
•2024: 47.4%
•LTM: 55.6%
$ASML has excellent return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2014: $7.09B
•2024: $29.28B
•CAGR: 15.23%
FREE CASH FLOW*
• $ASML FCF is very sporadic due to heavy capital expenditures & isn’t necessarily the most reliable way to analyze the company’s value
NORMALIZED EPS✅
•2014: $3.15
•2024: $20.03
•CAGR: 20.31%
SHARE BUYBACKS✅
•2018 Shares Outstanding: 426.40M
•LTM Shares Outstanding: 393.30M
By reducing its shares outstanding ~7.7%, $ASML increased its EPS by ~8.3% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 52.0%
•LTM Operating Margins: 33.8%
•LTM Net Income Margins: 28.3%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~18% MORE in EPS & 10% MORE in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $ASML has to grow earnings at a 13.17% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be more than the (13.17%) required growth rate:
2025E: $26.60 (21.6% YoY) *FY Dec
2026E: $30.75 (15.6% YoY)
2027E: $37.29 (20.7% YoY)
$ASML has a decent track record of meeting analyst estimates ~2 years out. HOWEVER, let’s be conservative & assume $ASML ends 2027 with $35.00*** in EPS (~6% below current estimates) & see its CAGR potential assuming different multiples:
29x P/E: $1,015💵 … ~17.0% CAGR
28x P/E: $980💵 … ~15.4% CAGR
27x P/E: $945💵 … ~13.9% CAGR
26x P/E: $910💵 … ~12.3% CAGR
25x P/E: $875💵 … ~10.7% CAGR
As you can see, $ASML appears to have attractive return potential EVEN if we assume greater or equal to 25x EPS (below its 10-year mean, current multiple, & justified given its quality, moat & growth rate)
Today at $687💵 $ASML appears to be a strong consideration for investment, albeit with extreme volatility
Additionally, we have some margin of safety by relying on a lower multiple & lower growth rate
As I’ve stated before, given its volatility, however, it’s wise to piece into $ASML — this way, you enhance your margin of safety while also positioning yourself to “win-win” if the stock moves up or down in the short-term 💵
#stocks #investing
___
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, 𝐛[...]