⁠Stock Analysis Compilation
Munro on ASML $ASML NA

Thesis: ASML's dominant position in semiconductor lithography and strong demand from key players like TSMC position the company for continued growth, despite near-term challenges.

(Extract from their Q3 letter) https://t.co/NSjUOlfjZU
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⁠Startup Archive
Elon Musk on building his first startup Zip2

In 1995, when he was just 23 years old, Elon dropped out of Stanford’s PhD program in physics to start Zip2 with his brother Kimbal Musk.

Elon personally wrote the first national maps, directions, yellow pages and white pages on the Internet that summer in C with a little C++.

In this CBS interview, a 27 year old Elon describes living in a $200/month office with a leaky roof:

“We found that an office was actually cheaper than apartment in Silicon Valley and we got this dinky little office that had a leaky roof. It was just the nastiest place you could imagine. I lived in it too and showered at the YMCA. This lasted for about three or four months, and the reason we chose this office — in addition to it being really cheap — was that there was an internet service provider on the floor below. So we were able to get really cheap internet access by drilling a hole in the floor and connecting to their server directly.”

In February 1999 — less than a year after this interview — Compaq would purchase Zip2 for $307 million in cash.

The interviewer also asks Elon what he thinks the future of the Internet will be, to which Elon responds:

“I think the internet is the superset of all media. It is the be all and end all of media. One will see print, broadcast, radio — essentially all media — folding into the internet. What the internet amounts to is it’s the first two-way communication medium that is intelligent. It allows consumers to choose what they want to see, when they want to see it.”
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⁠Stock Analysis Compilation
Aoris on Fastenal $FAST US

Thesis: Fastenal’s unique inventory management services and low employee turnover make it an indispensable supply chain partner with long-term growth potential.

(Extract from their Q3 letter) https://t.co/mj8xGsz2Zh
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⁠Dimitry Nakhla | Babylon Capital®
Valuations, relative to growth rates, matter … eventually … $MPWR down ~40% in a month 🔴

#stocks #investing https://t.co/0Vayd8Tjpa
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⁠Quiver Quantitative
Unreal.

We posted this report on a suspicious purchase of Fair Isaac stock by a U.S. Congressman in May.

$FICO has now risen 104% since the trade.

Look at this: https://t.co/4h9HmwvzXq
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⁠Dimitry Nakhla | Babylon Capital®
3 months ago I stated:

“Today at $239.00💵 $CRM appears to be worthwhile consideration for investment”

Since then, $CRM shares gained +42% ✅

As I suggested in the post attached below👇🏽

“As you can see, we’d have to assume >24x earnings for $CRM to have double digit CAGR potential (a multiple justified by its growth rate & moat)

Today at $239.00💵 $CRM appears to be worthwhile consideration for investment especially when you assess the trajectory of the company’s FCF & Net Income margins (steadily trending higher with further room to expand)”

#stocks #investing

A sober valuation analysis on $CRM 🧘🏽‍♂️

•NTM P/E Ratio: 23.79x
•3-Year Mean: 36.36x

•NTM FCF Yield: 5.00%
•3-Year Mean: 3.85%

As you can see, $CRM appears to be trading below fair value

Going forward, investors can expect to receive ~52% MORE in earnings per share & ~30% MORE in FCF per share🧠***

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

BALANCE SHEET✅
•Cash & Equivalents: $17.67B
•Long-Term Debt: $8.43B

$CRM has an excellent balance sheet, an A+ S&P Credit Rating & 413x FFO Interest Coverage Ratio

RETURN ON CAPITAL🆗
•2020: 1.2%
•2021: 0.9%
•2022: 0.8%
•2023: 2.5%
•2024: 8.2%
•LTM: 9.0%

RETURN ON EQUITY🆗
•2020: 0.5%
•2021: 10.8%
•2022: 2.9%
•2023: 0.4%
•2024: 7.0%
•LTM: 9.3%

$CRM return metrics are ok, although more recently trending in the right direction

REVENUES✅
•2014: $4.07B
•2024: $34.86B
•CAGR: 23.95%

FREE CASH FLOW✅
•2014: $576.36M
•2024: $9.49B
•CAGR: 32.34%

NORMALIZED EPS✅
•2014: $0.35
•2024: $8.22
•CAGR: 37.11%

SHARE BUYBACKS❌
•2014 Shares Outstanding: 597.61M
•LTM Shares Outstanding: 971.50M

By increasing its shares outstanding ~63%, $CRM diluted its EPS by ~38% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 76.0%
•LTM Operating Margins: 18.4%
•LTM Net Income Margins: 15.3%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~52% MORE in EPS & ~30% MORE FCF per share

Using Benjamin Graham’s 2G rule of thumb, $CRM has to grow earnings at an 11.90% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be slightly more than the (11.90%) required growth rate:

2025E: $9.90 (20.5% YoY) *FY Jan
2026E: $11.01 (11.2% YoY)
2027E: $12.58 (14.2% YoY)

$CRM has an excellent track record of meeting analyst estimates ~2 years out, so let’s assume $CRM ends 2027 with $12.58 in EPS & see its CAGR potential assuming different multiples

25x P/E: $314.50💵 … ~12.3% CAGR

24x P/E: $301.92💵 … ~10.5% CAGR

23x P/E: $289.34💵 … ~8.6% CAGR

As you can see, we’d have to assume >24x earnings for $CRM to have double digit CAGR potential (a multiple justified by its growth rate & moat)

Today at $239.00💵 $CRM appears to be worthwhile consideration for investment especially when you assess the trajectory of the company’s FCF & Net Income margins (steadily trending higher with further room to expand)

To ensure some margin of safety, if there’s further weakness, it could be wise to piece into the position, for example:

Initiating ~50% of the position at ~$239💵 & adding a second tranche at ~$200💵 or at ~20x NTM earnings

#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, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲. - Dimitry Nakhla | Babylon Capital®
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⁠Dimitry Nakhla | Babylon Capital®
RT @Invest_Smart_18: @DimitryNakhla Easily the most under followed account in the #investing #stocks space out here. Such high quality analysis. Great job and sincere thank you
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