⁠Dimitry Nakhla | Babylon Capital®
10 Quality Stocks NTM P/FCF | FCF Growth Estimates 2025 - 2026 | LTM ROIC 💸

🤖 NVIDIA $NVDA
•P/FCF: 49.67x
•2025E FCF: $59.25B (+119.3%)
•2026E FCF: $78.84B (+33.1%)
•LTM ROIC: 26.0%

📊 Salesforce $CRM
•P/FCF: 20.39x
•2025E FCF: $11.74B (+23.7%)
•2026E FCF: $13.30B (+13.2%)
•LTM ROIC: 9.0%

📦 Amazon $AMZN
•P/FCF: 33.15x
•2025E FCF: $78.79B (+27.1%)
•2026E FCF: $102.26B (+29.8%)
•LTM ROIC: 12.6%

💳 Mastercard $MA
•P/FCF: 30.46x
•2025E FCF: $14.73B (+21.6%)
•2026E FCF: $17.28B (+17.3%)
•LTM ROIC: 64.1%

📈 S&P Global $SPGI
•P/FCF: 26.68x
•2025E FCF: $4.85B (+12.3%)
•2026E FCF: $5.49B (+13.2%)
•LTM ROIC: 9.0%

🖱️ Alphabet $GOOG
•P/FCF: 27.05x
•2025E FCF: $92.15B (+14.7%)
•2026E FCF: $108.82B (+18.1%)
•LTM ROIC: 30.2%

📸 META $META
•P/FCF: 26.85x
•2025E FCF: $52.17B (+14.1%)
•2026E FCF: $58.94B (+13.0%)
•LTM ROIC: 30.1%

🖨️ ASML Holding $ASML
•P/FCF: 63.68x
•2025E FCF: $9.31B (+73.1%)
•2026E FCF: $11.94B (+28.3%)
•LTM ROIC: 43.8%

📲 Taiwan Semiconductor $TSM
•P/FCF: 49.01x
•2025E FCF: $26.93B (+33.8%)
•2026E FCF: $41.35B (+53.5%)
•LTM ROIC: 20.1%

📉 Intercontinental Exchange $ICE
•P/FCF: 20.15x
•2025E FCF: $4.08B (+11.0%)
•2026E FCF: $4.63B (+13.5%)
•LTM ROIC: 7.7%

#stocks #investing
tweet

⁠Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $MNST 🧘🏽‍♂️

•NTM P/E Ratio: 26.71x
•10-Year Mean: 33.16x

•NTM FCF Yield: 3.36%
•10-Year Mean: 3.05%

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

Going forward, investors can receive ~24% MORE in earnings per share & ~10% MORE in FCF per share 🧠***

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

BALANCE SHEET✅
•Cash & Short-Term Inv: $3.56B
•Long-Term Debt: $0

$MNST has an excellent balance sheet

RETURN ON CAPITAL✅
•2019: 33.7%
•2020: 31.5%
•2021: 27.4%
•2022: 22.4%
•2023: 24.3%
•LTM: 24.0%

RETURN ON EQUITY✅
•2019: 28.5%
•2020: 30.2%
•2021: 23.5%
•2022: 17.5%
•2023: 21.4%
•LTM: 21.0%

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

REVENUES✅
•2013: $2.25B
•2023: $7.14B
•CAGR: 12.24%

FREE CASH FLOW✅
•2013: $301.27M
•2023: $1.49B
•CAGR: 17.38%

NORMALIZED EPS✅
•2013: $0.34
•2023: $1.54
•CAGR: 16.30%

SHARE BUYBACKS❌
•2013 Shares Outstanding: 1.04B
•LTM Shares Outstanding: 1.05B

MARGINS✅
•LTM Gross Margins: 53.5%
•LTM Operating Margins: 28.2%
•LTM Net Income Margins: 22.8%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~24% MORE in EPS & ~10% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $MNST has to grow earnings at a 13.36% CAGR over the next several years to justify its valuation

Today, analysts anticipate 2024 - 2026 EPS growth over the next few years to be slightly more than the (13.36%) required growth rate:

2024E: $1.78 (15.8% YoY) *FY Dec
2025E: $2.04 (14.4% YoY)
2026E: $2.31 (13.3% YoY)

$MNST has a great track record of meeting analyst estimates ~2 years out, so let’s assume $MNST ends 2026 with $2.31 in EPS & see its CAGR potential assuming different multiples

32x P/E: $73.92💵 … ~17.8% CAGR

30x P/E: $69.30💵 … ~14.8% CAGR

29x P/E: $66.99💵 … ~13.3% CAGR

28x P/E: $64.68💵 … ~11.7% CAGR

As you can see, $MNST appears to have attractive return potential EVEN if we assume 28x earnings, a multiple substantially below its 5-year mean (32.24x) & 10-year mean (33.16x)

Today at $49💵 $MNST appears to be an attractive consideration for investment

#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.
tweet

AkhenOsiris
RT @markflowchatter: Nvidia $NVDA weak in the pre , on some cautious comments from a 3Pdata shop citing momentum weakening in June and less than May - keyword on the AI theme is weakening
tweet

⁠Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: 15 Quality Linear Compounders | Normalized EPS 2008 - 2023 | LTM ROIC🧵

#stocks #investing https://t.co/88H7DTH7vY
tweet

⁠Dimitry Nakhla | Babylon Capital®
10 Quality Stocks With Double The YTD Return Of $SPY (+12.02%) | NTM P/E | 5-Year Mean P/E 💵

#stocks #investing https://t.co/Tgl4EQ96UF
tweet

AkhenOsiris
$AMZN

BI:

Amazon wants Metis to use an AI technique called retrieval-augmented generation, or RAG, the people said. This means Metis will be able to retrieve information from beyond the original data used to train its underlying Olympus model.

The goal is to generate more up-to-date responses. For example, Metis should be able to share the latest stock prices, while some other chatbots that are not RAG can't do so, the people familiar with the situation said.

Metis is also expected to work as an AI agent, one of the people said. AI agents are capable of automating and performing complex tasks based on existing data, like planning a vacation itinerary. Metis's potential use cases range from turning on your lights to booking a flight for you, one of the people told BI.

Jassy is directly involved in Metis and has recently reviewed the progress of the team, one of the people said. The project is currently being tested internally, this person added.

Amazon's AGI team
Metis is part of Amazon's AGI team, led by head scientist and SVP Rohit Prasad, the people familiar with the project said. Jassy last year said this team would report to him and be responsible for building the most ambitious AI models for Amazon, BI previously reported. Vishal Sharma, VP of AGI, has direct oversight of Project Metis, one of the people said.

Amazon is also relying on Alexa for the development of Metis, two of the people said. Many employees working on Metis moved over from Alexa's AI team, and Metis's technology uses some of the resources found in the upgraded version of Alexa, internally dubbed "Remarkable Alexa," they said. BI first reported in January that Amazon plans to launch a new paid version of Alexa, powered by Remarkable Alexa, and a new web browser-based service.

The tentative launch date for Metis is September, right around the time when Amazon hosts a big Alexa event, though the timeline could change, one of the people said. Still, some people on the Metis team said it feels like Amazon is already late to the AI chatbot game and it's unclear how much investment the company is committed to make for the project.

"Technically it will work, I guess, but the question is if it's already too late," one of the people said. "We're playing chase."
tweet

AkhenOsiris
$NET Upgrade

UBS Upgrades Cloudflare to Neutral with $82 PT "Initially, we rated as Sell due to concerns about the premium multiple, near-term Al upside, and go-to-market (GTM) challenges." "However, following recent GTM momentum, better SASE checks, a 1Q guide-down, and a valuation de-rating, we now see a more balanced risk/reward." "Growth headwinds, with Consensus mid-20% revenue grOwth similar to our estimates, appear reflected with shares down 12% since 1Q (vs IGV up 5%)."
tweet

⁠Dimitry Nakhla | Babylon Capital®
Interesting to compare FCF Estimates of $AMZN $NVDA $GOOG & $MSFT 💵

• By the end of 2028, $AMZN is projected to generate more FCF ($142.34B) than the rest 💸

• $NVDA is projected to nearly triple its FCF in 2 years (2024-2026) 🤯

• Despite $NVDA outstanding growth, $GOOG & $MSFT FCF projections are still impressive 📈

Current valuations:

• $AMZN 1.96T
• $NVDA 3.00T
• $GOOG 2.25T
• $MSFT 3.34T

Any thoughts? Comment below 👇🏽

#stocks #investing
tweet

⁠Dimitry Nakhla | Babylon Capital®
RT @DimitryNakhla: Looking back at some of your best investment decisions & your worst investment mistakes can help you become a better investor 💸

Mistake # 1 & Best # 3 are my favorites ‼️

You will benefit from reading this, these are things I wish I knew early on 💯

Here are 3 of my biggest MISTAKES 👎🏽:

1️⃣ I waited too long to buy high-quality businesses — I was mentored in 2016 & my mentor was a VALUE first investor (rather than QUALITY first) & was heavily influenced by Benjamin Graham’s ideologies as it related to low multiples, tangible assets, etc.

Higher multiples scared him off and as a result, scared me off as well

I did not understand why some companies deserved to trade at a premium & would continue to demand a premium

The opportunity cost here included owning companies like $V $MA $COST $GOOG $SHW all the way back in 2016 — companies I was interested in buying & owning but ended up never buying due to their multiples

2️⃣ Selling $ABBV after a 100% gain

When the Brexit crisis happened in June 2016 I accumulated shares of $ABBV near $58. When $ABBV acquired Allergan for a P/B <1 i accumulated even more shares near $57

i liquidated my $abbv holding for a ~100% gain at $120 — a big mistake, here’s why:

today, $abbv dividend is $6.20 per share meaning that my yield on cost would have been ~10.5% 🤯

imagine getting 10.5% of your original investment from dividends (along with future dividend growth)

while biotech & biopharma can be volatile, i under-appreciated $abbv pipeline, corporate culture stemming from $abt (a dividend aristocrat), quality & total return potential. i should have been more patient and considered it an untouchable holding unless, of course, the fundamentals began to crack

3️⃣ early in my investing journey, i used to find comfort (a false comfort) in knowing i was invested in the same companies as some investors that i looked up to — this is a mistake because if you don’t build your own conviction (through research & a well defined system), you will likely lack the courage to hold through bad times or to even add more during bad times
_______

here are 3 of my best decisions 👍🏽:

1️⃣ i cannot emphasize how important it is to have an insatiable curiosity as an investor … read, read, read … reading @chriswmayer 100 baggers led me to find $cprt & appreciate the quality (especially linearity) of the business. just that one find made reading the book worth it 10x over

reading nick sleep’s investor letters led me to appreciate why scale economics is such an important concept to understand, $cost & $amzn are two great examples (core holdings of the nomad investment partnership) of catching quality businesses early on that benefit from scale economics — it’s like a snowball that continues to get bigger as it rolls down a mountain

seth klarman’s margin of safety, berkshire’s investment letters, market wizards, etc.

always read & learn, it will make you a better investor

2️⃣ contrary to mistake 1, one of the best investment decisions was understanding why some companies maintain premium multiples & adding them at opportune times despite the fact that they may have seemed “expensive”

it also helps to analyze the valuations of these businesses relative to growth (think peg)

e.g. $cprt $asml $v $ma $odfl $acn $fast are all core holdings in my portfolio now & businesses i plan to own long-term

3️⃣ simplifying your process — whether you’re an investor or trader, it really helps to simplify complex topics

while some may think complexity makes them look smarter, simplification is actually more difficult because it requires you to really understand what matters & if it’s simple — it’s easier to replicate, bringing more consistency in your results

think the pareto principle, 80% of the consequences come from 20% of causes

my investment process comes down to analyzing quality (balance sheet, returns on capital, consistency in fcf & eps growth) & then valuation relative to growth 💯

#stocks #investing
tweet