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InsideArbitrage
CECO Environmental $CECO completed the tender offer to acquire all of the shares of Profire Energy $PFIE at a price per share of $2.55.
The Offer expired on December 31, 2024. https://t.co/Z5ydcoxTHq
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CECO Environmental $CECO completed the tender offer to acquire all of the shares of Profire Energy $PFIE at a price per share of $2.55.
The Offer expired on December 31, 2024. https://t.co/Z5ydcoxTHq
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Stock Analysis Compilation
Perritt CM on Ceragon Networks $CRNT US
Thesis: Ceragon leverages wireless innovation and rising demand for high-bandwidth networks, poised for rapid growth and operational gains
(Extract from their article) https://t.co/Yb3n8ifXTf
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Perritt CM on Ceragon Networks $CRNT US
Thesis: Ceragon leverages wireless innovation and rising demand for high-bandwidth networks, poised for rapid growth and operational gains
(Extract from their article) https://t.co/Yb3n8ifXTf
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Quiver Quantitative
BREAKING: Representative Mike Collins just bought up to another $15K of a cryptocurrency called "Ski Mask Dog".
It appears to have a market cap of just over $200M.
The last time he bought the coin, it rose 280% in three days.
Track politicians' portfolios on Quiver. https://t.co/4yhBzY8hM0
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BREAKING: Representative Mike Collins just bought up to another $15K of a cryptocurrency called "Ski Mask Dog".
It appears to have a market cap of just over $200M.
The last time he bought the coin, it rose 280% in three days.
Track politicians' portfolios on Quiver. https://t.co/4yhBzY8hM0
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Investing visuals
Tesla $TSLA delivered 495,570 vehicles in Q4 2024, well below estimates of 512,466. The Stock is down -6% as a result.
An overview of $TSLA car deliveries over the past years👇 https://t.co/dWc2oKwDU7
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Tesla $TSLA delivered 495,570 vehicles in Q4 2024, well below estimates of 512,466. The Stock is down -6% as a result.
An overview of $TSLA car deliveries over the past years👇 https://t.co/dWc2oKwDU7
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Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $MELI 🧘🏽♂️
•NTM P/E Ratio: 46.01x
•1-Year Mean: 48.23x
As you can see, $MELI appears to be trading near fair value
Going forward, investors can receive ~5% MORE earnings per share 🧠***
Before we get into valuation, let’s take a look at why $MELI is a great business
BALANCE SHEET✅
•Cash & Short-Term Inv: $6.67B
•Long-Term Debt: $3.04B
$MELI has a strong balance sheet, an ok BB+ S&P Credit Rating & 20x FFO Interest Coverage
RETURN ON CAPITAL🆗➡️✅
•2019: (4.8%)
•2020: 3.7%
•2021: 8.1%
•2022: 14.2%
•2023: 25.3%
•LTM: 20.1%
RETURN ON EQUITY🆗➡️✅
•2019: (14.2%)
•2020: (0.1%)
•2021: 5.2%
•2022: 28.7%
•2023: 40.3%
•LTM: 42.6%
$MELI has strong and improved return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2018: $1.44B
•2023: $14.47B
•CAGR: 58.64%
FREE CASH FLOW✅
•2018: $133.35M
•2023: $4.63B
•CAGR: 203.29%
NORMALIZED EPS✅
•2018: ($0.82)
•2023: $22.84
SHARE BUYBACKS❌
•2013 Shares Outstanding: 44.53M
•LTM Shares Outstanding: 51.28M
MARGINS🆗➡️✅
•LTM Gross Margins: 52.5%
•LTM Operating Margins: 11.4%
•LTM Net Income Margins: 7.8%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~5% MORE in EPS
Using Benjamin Graham’s 2G rule of thumb, $MELI has to grow earnings at a 23.01% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be more than the (23.01%) required growth rate:
2024E: $33.53 (46.8% YoY) *FY Dec
2025E: $45.32 (35.1% YoY)
2026E: $61.78 (36.3% YoY)
$MELI has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $MELI ends 2026 with $61.78 in EPS & see its CAGR potential assuming different multiples
40x P/E: $2471💵 … ~18.8% CAGR
38x P/E: $2347💵 … ~15.8% CAGR
36x P/E: $2224💵 … ~12.8% CAGR
34x P/E: $2100💵 … ~9.6% CAGR
As you can see, $MELI appears to have attractive return potential IF we assume >36x earnings (a multiple justified by its growth rate & moat)
$MELI boasts an expansive growth trajectory, fueled by powerful network effects that should drive sustained momentum
Key factors contributing to its promising outlook include 🔑
1. Margin expansion
2. Unparalleled access to Latin America's burgeoning economy
3. Network effects that produce self-reinforcing dynamics ensuring long-term competitiveness, among other things
Those buying $MELI today at $1750💵 are buying an excellent growth company at a fair, or better, price
While it’s wise to be skeptical of aggressive growth rates, $MELI growth rates have to be revised down substantially for $MELI to miss the mark, even if the company grows earnings at 25% CAGR over the next 5 years, shareholders will likely end up with a decent return
I consider $MELI a strong buy closer to $1,650💵 (~7% below today’s price) where I can reasonably expect ~12.8% CAGR while assuming a 34x end multiple, ensuring some margin of safety
___
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 𝐜𝐨𝐧𝐭𝐚𝐢[...]
A quality valuation analysis on $MELI 🧘🏽♂️
•NTM P/E Ratio: 46.01x
•1-Year Mean: 48.23x
As you can see, $MELI appears to be trading near fair value
Going forward, investors can receive ~5% MORE earnings per share 🧠***
Before we get into valuation, let’s take a look at why $MELI is a great business
BALANCE SHEET✅
•Cash & Short-Term Inv: $6.67B
•Long-Term Debt: $3.04B
$MELI has a strong balance sheet, an ok BB+ S&P Credit Rating & 20x FFO Interest Coverage
RETURN ON CAPITAL🆗➡️✅
•2019: (4.8%)
•2020: 3.7%
•2021: 8.1%
•2022: 14.2%
•2023: 25.3%
•LTM: 20.1%
RETURN ON EQUITY🆗➡️✅
•2019: (14.2%)
•2020: (0.1%)
•2021: 5.2%
•2022: 28.7%
•2023: 40.3%
•LTM: 42.6%
$MELI has strong and improved return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2018: $1.44B
•2023: $14.47B
•CAGR: 58.64%
FREE CASH FLOW✅
•2018: $133.35M
•2023: $4.63B
•CAGR: 203.29%
NORMALIZED EPS✅
•2018: ($0.82)
•2023: $22.84
SHARE BUYBACKS❌
•2013 Shares Outstanding: 44.53M
•LTM Shares Outstanding: 51.28M
MARGINS🆗➡️✅
•LTM Gross Margins: 52.5%
•LTM Operating Margins: 11.4%
•LTM Net Income Margins: 7.8%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~5% MORE in EPS
Using Benjamin Graham’s 2G rule of thumb, $MELI has to grow earnings at a 23.01% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2026 EPS growth over the next few years to be more than the (23.01%) required growth rate:
2024E: $33.53 (46.8% YoY) *FY Dec
2025E: $45.32 (35.1% YoY)
2026E: $61.78 (36.3% YoY)
$MELI has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $MELI ends 2026 with $61.78 in EPS & see its CAGR potential assuming different multiples
40x P/E: $2471💵 … ~18.8% CAGR
38x P/E: $2347💵 … ~15.8% CAGR
36x P/E: $2224💵 … ~12.8% CAGR
34x P/E: $2100💵 … ~9.6% CAGR
As you can see, $MELI appears to have attractive return potential IF we assume >36x earnings (a multiple justified by its growth rate & moat)
$MELI boasts an expansive growth trajectory, fueled by powerful network effects that should drive sustained momentum
Key factors contributing to its promising outlook include 🔑
1. Margin expansion
2. Unparalleled access to Latin America's burgeoning economy
3. Network effects that produce self-reinforcing dynamics ensuring long-term competitiveness, among other things
Those buying $MELI today at $1750💵 are buying an excellent growth company at a fair, or better, price
While it’s wise to be skeptical of aggressive growth rates, $MELI growth rates have to be revised down substantially for $MELI to miss the mark, even if the company grows earnings at 25% CAGR over the next 5 years, shareholders will likely end up with a decent return
I consider $MELI a strong buy closer to $1,650💵 (~7% below today’s price) where I can reasonably expect ~12.8% CAGR while assuming a 34x end multiple, ensuring some margin of safety
___
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 𝐜𝐨𝐧𝐭𝐚𝐢[...]
Offshore
Dimitry Nakhla | Babylon Capital® A quality valuation analysis on $MELI 🧘🏽♂️ •NTM P/E Ratio: 46.01x •1-Year Mean: 48.23x As you can see, $MELI appears to be trading near fair value Going forward, investors can receive ~5% MORE earnings per share 🧠***…
𝐧𝐞𝐝 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
Riverwater Partners on Mama's Creations $MAMA US
Thesis: Mama's Creations capitalizes on fresh food growth and Costco partnerships, showcasing robust margins and scalable market opportunities
(Extract from their Q3 letter) https://t.co/UTyR7ao4uT
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Riverwater Partners on Mama's Creations $MAMA US
Thesis: Mama's Creations capitalizes on fresh food growth and Costco partnerships, showcasing robust margins and scalable market opportunities
(Extract from their Q3 letter) https://t.co/UTyR7ao4uT
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Startup Archive
Cruise founder Kyle Vogt’s framework for choosing a startup idea
After cofounding Twitch and selling the company to Amazon for $1 billion in 2014, Kyle was trying to figure out what to do next:
“Twitch was and is today pretty successful but the result was entertainment mostly… That was a good thing. It felt good to entertain people, but… I realized I wanted something that scratched more of an existential itch.”
Twitch took eight years to become successful, so one of Kyle’s core requirements for his next idea was that he had to be willing to commit at least 10 years to it. As he explains, “When you think about things from that perspective, you certainly raise the bar for what you choose to work on.”
Ultimately Kyle came up with three requirements for his next company:
1. Interesting technology. “It had to be something where the technology itself determines the success of the product. Like hard, really juicy technology problems, because that’s what motivates me.”
2. Impactful. “It had to have a direct and positive impact on society in some way. So an example would be healthcare or self-driving cars because they save lives… There’s a clear connection to somehow improving other people’s lives.”
3. Large scale. “It had to be a big business because for the positive impact to matter, it’s got to be a large scale.”
After thinking on it more and experimenting with various side projects, he ultimately decided self driving cars was what he wanted to work on:
“I just took the plunge right then and there and said, this is something I know I can commit 10 years to. It’s probably the greatest applied AI problem of our generation. And if it works, it’s going to be both a huge business and probably the most positive impact I can possibly have on the world.”
General Motors acquired Cruise for more than $1 billion two years later, but Kyle continued to work on self-driving as CEO of Cruise through November 2023. So his 10-year forecast actually proved quite accurate.
Sam Altman gives similar advice in his blog post “Startup Advice”: “In general, don’t start a startup you’re not willing to work on for ten years.”
Video source: @lexfridman (2019)
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Cruise founder Kyle Vogt’s framework for choosing a startup idea
After cofounding Twitch and selling the company to Amazon for $1 billion in 2014, Kyle was trying to figure out what to do next:
“Twitch was and is today pretty successful but the result was entertainment mostly… That was a good thing. It felt good to entertain people, but… I realized I wanted something that scratched more of an existential itch.”
Twitch took eight years to become successful, so one of Kyle’s core requirements for his next idea was that he had to be willing to commit at least 10 years to it. As he explains, “When you think about things from that perspective, you certainly raise the bar for what you choose to work on.”
Ultimately Kyle came up with three requirements for his next company:
1. Interesting technology. “It had to be something where the technology itself determines the success of the product. Like hard, really juicy technology problems, because that’s what motivates me.”
2. Impactful. “It had to have a direct and positive impact on society in some way. So an example would be healthcare or self-driving cars because they save lives… There’s a clear connection to somehow improving other people’s lives.”
3. Large scale. “It had to be a big business because for the positive impact to matter, it’s got to be a large scale.”
After thinking on it more and experimenting with various side projects, he ultimately decided self driving cars was what he wanted to work on:
“I just took the plunge right then and there and said, this is something I know I can commit 10 years to. It’s probably the greatest applied AI problem of our generation. And if it works, it’s going to be both a huge business and probably the most positive impact I can possibly have on the world.”
General Motors acquired Cruise for more than $1 billion two years later, but Kyle continued to work on self-driving as CEO of Cruise through November 2023. So his 10-year forecast actually proved quite accurate.
Sam Altman gives similar advice in his blog post “Startup Advice”: “In general, don’t start a startup you’re not willing to work on for ten years.”
Video source: @lexfridman (2019)
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