⁠Dimitry Nakhla | Babylon Capital®
My TipRanks Weekly 💯

Top 1.86% among ~756K investors 👌🏽

#stocks #investing https://t.co/NnrkNInc3x
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⁠Stock Analysis Compilation
Baron Capital on Broadcom $AVGO US

Thesis: Broadcom is set to capitalize on explosive AI growth and its strategic VMWare acquisition, driving strong performance in both the short and long term

(Extract from their Q2 letter) https://t.co/jCXaoNcNPH
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⁠Librarian Capital
Presented without comment https://t.co/xPb9mHh6Rl

Trump: “Residents are reporting the migrants are walking off with the town's geese. They've taken the geese. You know where the geese are? In the park, in the lake. And even walking off with their pets. My dog's been taken! My dog's gone! These people are the worst” https://t.co/bm3bbALqT9 - Republicans against Trump
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⁠Stock Analysis Compilation
Baron Capital on Integer Holdings Corporation $ITGR US

Thesis: Integer Holdings is primed for rapid growth, leveraging its leadership in med-tech manufacturing and strategic acquisitions to outpace the market

(Extract from their Q2 letter) https://t.co/bDaYNMjoUj
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⁠Ahmad Jivraj
10 Fun Facts about $PLTR !

This data analytics company has a unique and controversial history in the tech world.
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⁠Librarian Capital
FeverTree $FEVR: top-3 holders include Lindsell Train (#1, 15.4%) and Smithson (#3, 6.2%)

Smithson bought back in 2019; more recently they are known for selling Rightmove $RMV near the bottom (in late 2023, when they also bought Croda $CRDA)

Investing is simple but not easy https://t.co/OwSTEm2UGT

FeverTree $FEVR discussion agenda

1/ Recap of thesis: FEVR as growth asset & acq. target
2/ Interpreting H1 sales growth; Jul-Aug acceleration
3/ Margin recovery & operational leverage
4/ FY24 outlook & FY25 comments
5/ Valuation and return forecasts
6/ Q&A
https://t.co/vHaevXLiq0 - Librarian Capital
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⁠Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: A sober valuation analysis on $META 🧘🏽‍♂️

•NTM P/E Ratio: 22.65x
•10-Year Mean: 26.32x

•NTM FCF Yield: 3.60%
•10-Year Mean: 3.33%

As you can see, $META appears to be slightly undervalued

Going forward, investors can expect to receive ~16% MORE in earnings per share & ~8% MORE in FCF per share🧠***

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

BALANCE SHEET✅
•Cash & Equivalents: $58.08B
•Long-Term Debt: $18.39B

$META has an excellent balance sheet, an AA- S&P Credit Rating & 148x FFO Interest Coverage Ratio

RETURN ON CAPITAL✅
•2019: 26.0%
•2020: 23.5%
•2021: 33.7%
•2022: 22.0%
•2023: 26.3%
•LTM: 31.7%

RETURN ON EQUITY✅
•2019: 20.0%
•2020: 25.4%
•2021: 31.1%
•2022: 18.5%
•2023: 28.0%
•LTM: 35.4%

$META has great return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2018: $55.84B
•2023: $134.90B
•CAGR: 19.29%

FREE CASH FLOW✅
•2018: $15.36B
•2023: $43.85B
•CAGR: 23.34%

NORMALIZED EPS✅
•2018: $7.57
•2023: $14.87
•CAGR: 14.45%

SHARE BUYBACKS✅
•2018 Shares Outstanding: 2.92B
•LTM Shares Outstanding: 2.64B

By reducing its shares outstanding ~9.5%, $META increased its EPS by ~10.5% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 81.5%
•LTM Operating Margins: 41.2%
•LTM Net Income Margins: 34.3%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~16% MORE in EPS & ~8% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $META has to grow earnings at an 11.33% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be greater than the (11.33%) required growth rate:

2024E: $21.26 (43.0% YoY) *FY Dec
2025E: $24.41 (14.8% YoY)
2026E: $27.97 (14.6% YoY)

$META has a decent track record of meeting analyst estimates ~2 years out, so let’s assume $META ends 2026 with $27.97 in EPS & see its CAGR potential assuming different multiples

24x P/E: $671.28💵 … ~12.7% CAGR

23x P/E: $643.31💵 … ~10.7% CAGR

22x P/E: $615.34💵 … ~8.6% CAGR

21x P/E: $587.37💵 … ~6.5% CAGR

As you can see, $META appears to have double-digit CAGR potential if we assume >23x earnings, a multiple slightly below what it’s trading for today and a multiple below what may be justified given its mid-teens earnings growth rate

And as we’ve already seen, the increased investment in future growth and necessary AI development has the potential to drive better growth prospects could be a bullish catalyst for the next several years

Today at $511💵 $META appears to be a decent consideration for investment

$META appears to be an excellent deal closer to $465💵 where it has ~11% CAGR potential assuming 2026E and a 21x multiple (an added layer of margin of safety)

#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
Davis fund on Applied Materials $AMAT US

Thesis: Applied Materials is primed to benefit from the AI boom, leveraging its expertise in advanced semiconductor manufacturing to capture a growing market share

(Extract from their Q2 letter) https://t.co/gptVE7XIlM
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