⁠Stock Analysis Compilation
Focus CM on Burford Capital $BUR LN

Thesis: Burford Capital is a global litigation finance company showing strong operational growth and potential for recovery in stock valuation despite recent legal challenges and a significant ongoing case against Argentina.

(Extract from their Q4 letter)
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⁠Investing visuals
$AMD is down -10% after after weaker-than-expected data center revenue.

Big picture: data center revenue is up 650% over the past 4 years👌 https://t.co/YjdU9hDifE
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⁠Quiver Quantitative
This is wild.

Last week we sent out a notification on Pelosi's purchase of Tempus AI call options.

$TEM has now risen 118% since the purchase.

118%.

It's been like three weeks.

It has risen almost every day.

Up another 10% today. https://t.co/HqFNVusVGj
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⁠App Economy Insights
$DIS Disney Q1 FY25:

• Revenue +5% Y/Y to $24.7B ($150M beat).
• Non-GAAP EPS $1.76 ($0.33 beat).

Segment operating margin:
🍿 Entertainment: 16% (+7pp Y/Y).
🏈 Sports: 5% (+7pp Y/Y).
🏰 Experience: 33% (-1pp Y/Y).

FY25 EPS growth high single digit (unchanged). https://t.co/C9G3aosZ2k
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⁠Dimitry Nakhla | Babylon Capital®
Updated CAGR potential for $GOOG $190💵

24x P/E: ~15.0% CAGR

23x P/E: ~13.3% CAGR

22x P/E: ~11.6% CAGR

21x P/E: ~9.8% CAGR

20x P/E: ~8.0% CAGR

19x P/E: ~6.2% CAGR

*Assuming 2027 EPS $11.83 (Most Recent Estimate)

A quality valuation analysis on $GOOG 🧘🏽‍♂️

•NTM P/E Ratio: 23.48x
•10-Year Mean: 23.69x

•NTM FCF Yield: 3.77%
•10-Year Mean: 4.18%

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

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

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

BALANCE SHEET✅
•Cash & Short-Term Inv: $93.23B
•Long-Term Debt: $10.88B

$GOOG has a strong balance sheet, an AA+ S&P Credit Rating & 370x FFO Interest Coverage

RETURN ON CAPITAL✅
•2019: 16.4%
•2020: 16.2%
•2021: 27.6%
•2022: 26.1%
•2023: 28.1%
•LTM: 31.7%

RETURN ON EQUITY✅
•2019: 18.1%
•2020: 19.0%
•2021: 32.1%
•2022: 23.6%
•2023: 27.4%
•LTM: 32.1%

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

REVENUES✅
•2014: $136.82B
•2024E: $307.39
•CAGR: 18.15%

FREE CASH FLOW✅
•2014: $11.42B
•2024E: $75.45B
•CAGR: 20.78%

NORMALIZED EPS✅
•2014: $1.28
•2024E: $7.98
•CAGR: 20.08%

SHARE BUYBACKS✅
•2018 Shares Outstanding: 14.07B
•LTM Shares Outstanding: 12.51B

By reducing its shares outstanding ~11%, $GOOG increased its EPS by ~12.3% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 58.1%
•LTM Operating Margins: 32.1%
•LTM Net Income Margins: 27.7%

***NOW TO VALUATION 🧠

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

Using Benjamin Graham’s 2G rule of thumb, $GOOG has to grow earnings at an 11.74% 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 (11.74%) required growth rate:

2024E: $7.98 (37.7% YoY) *FY Dec

2025E: $9.00 (12.7% YoY)
2026E: $10.25 (13.9% YoY)
2027E: $11.86 (15.7% YoY)

$GOOG has an excellent track record of meeting analyst estimates ~2 years out, but let’s assume $GOOG ends 2027 with $11.86 in EPS & see its CAGR potential assuming different multiples

24x P/E: $274.64💵 … ~12.1% CAGR

23x P/E: $272.78💵 … ~10.4% CAGR

22x P/E: $260.92💵 … ~8.7% CAGR

21x P/E: $249.06💵 … ~7.0% CAGR

20x P/E: $237.20💵 … ~5.2% CAGR

As you can see, $GOOG appears to have attractive return potential IF we assume >23x earnings (a multiple near its 5-year & 10-year mean)

At >24x earnings, $GOOG has aggressive CAGR potential & it’s not unreasonable for the business to even trade for ~24x (given its growth rate, moat, balance sheet, & exemplary capital allocation)

Those buying $GOOG today at $206💵 are getting a great business at a fair price

Between cloud ☁️ , AI 🤖 , quantum computing ⚛️, $GOOG has a strong growth runway ahead

I consider $GOOG a strong buy with a substantial margin of safety closer to $180💵 where I could conservatively expect double-digit CAGR while assuming a 20x multiple

$GOOGL
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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 𝐩𝐞𝐫𝐟𝐨𝐫𝐦[...]

𝐚𝐧𝐜𝐞 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® tweet

⁠Quiver Quantitative
RT @QuiverCongress: Representative Brian Fitzpatrick just introduced a bipartisan bill to make 9/11 a federal holiday.

Follow here for updates. https://t.co/oEH2AWqmLp
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⁠InsideArbitrage
The InsideArbitrage Buyback Wednesdays is out!

"Significant Stock Repurchases at Twilio and DNOW"

👉 Full Article link in the final tweet!

🧵1/n https://t.co/UiXFJ0bsyn
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