⁠Hidden Value Gems
I wish we had more companies like that in 🇬🇧

$GAW.L 🚀 https://t.co/0ot5MGSYl3
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⁠Stock Analysis Compilation
Wasatch GI on MonotaRO $3064 JP

Thesis: MonotaRO’s strong growth trajectory, enhanced by superior service and strategic partnerships, positions it well for market share expansion in Japan’s MRO sector

(Extract from their Q3 letter) https://t.co/UYmQRPCG2g
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⁠Stock Analysis Compilation
Oakmark on Pernod Ricard $RI FP

Thesis: Pernod Ricard’s exposure to premium spirits and emerging markets growth, combined with its attractive valuation, offers a strong long-term investment opportunity.

(Extract from their Q3 letter) https://t.co/uD3Xeep8gg
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⁠Capital Employed
Great post about the investing style of Tony Deden by @Delta9Echo

https://t.co/1lwQFOxlEh?
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⁠iinvested
3Q'24 Baron Discovery Fund on $TWFG, $NARI

More fund letters here:
https://t.co/ccjFhSQnS3 https://t.co/TeZHGREWGt
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⁠Startup Archive
Naval Ravikant on shutting down a startup

“One thing I’ve learned myself the hard way, is that it is easier to tear down a company and restart it in Silicon Valley, than it is to constantly try to pivot or keep something alive. There’s very little stigma associated with capital loss or shutting down and restarting. And investors want to back entrepreneurs of experience. They know how difficult it is.”

He continues:

“It is so difficult to build something brand new that the world has never seen and to break through the noise and to get people to pay for it, to make an institution… It’s so difficult to do that. Very, very, few people succeed in the first go around. For every person you heard who succeeded in the first go around, they actually did five, ten other things at the same time or before. Even Mark Zuckerberg and Bill Gates and Steve Jobs—it wasn’t just their first thing. They built many projects along the way. They just started younger than you, and they parallel tracked, and they got lucky, and they were good.”

Investors know this:

“As an investor, you do want to back previously failed entrepreneurs. The ideal is to find someone who’s failed through no fault of their own or as little fault of their own or they’ve learned their way past it. Either the whole sector failed or there was a cofounder that’s no longer with them or there was a particular shot or a bet that they took and they followed the bet properly. The bet didn’t pay off and they realized it didn’t pay off and they moved on. But it’s easier to start over. So trying to cling with your fingernails onto something that’s not working, can waste a lot of your time.”

Video source: @AngelList (2023)
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⁠Dimitry Nakhla | Babylon Capital®
A sober valuation analysis on $ASML 🧘🏽‍♂️

•NTM P/E Ratio: 27.32x
•10-Year Mean: 31.07x

•NTM FCF Yield: 3.41%
•10-Year Mean: 3.11%

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

Going forward, investors can receive ~13% MORE in earnings per share & ~10% MORE in FCF per share🧠***

Before we get into valuation, let’s take a look at why $ASML is an excellent business (*Financials in USD*)

BALANCE SHEET✅
•Cash & Short Term Inv: $5.57B
•Long-Term Debt: $5.24B

$ASML has a strong balance sheet & 31x FFO Interest Coverage

RETURN ON CAPITAL✅
•2019: 17.5%
•2020: 21.6%
•2021: 43.8%
•2022: 48.0%
•2023: 48.7%
•LTM: 38.0%

RETURN ON EQUITY✅
•2019: 21.4%
•2020: 26.9%
•2021: 49.0%
•2022: 59.4%
•2023: 70.4%
•LTM: 49.2%

$ASML has excellent return metrics, highlighting the financial efficiency of the business

REVENUES✅
•2013: $7.22B
•2023: $30.42B
•CAGR: 15.46%

FREE CASH FLOW*
• $ASML FCF is very sporadic due to heavy capital expenditures & isn’t necessarily the most reliable way to analyze the company’s value

NORMALIZED EPS✅
•2013: $3.17
•2023: $21.65
•CAGR: 21.18%

SHARE BUYBACKS✅
•2018 Shares Outstanding: $426.40M
•LTM Shares Outstanding: 393.80M

By reducing its shares outstanding ~7.6%, $ASML increased its EPS by ~8.2% (assuming 0 growth)

MARGINS✅
•LTM Gross Margins: 51.1%
•LTM Operating Margins: 30.7%
•LTM Net Income Margins: 26.4%

***NOW TO VALUATION 🧠

As stated above, investors can expect to receive ~13% MORE in EPS & 10% MORE in FCF per share

Using Benjamin Graham’s 2G rule of thumb, $ASML has to grow earnings at a 13.61% 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 (13.61%) required growth rate:

2024E: $20.22 (-4.0% YoY) *FY Dec

2025E: $24.66 (21.9% YoY)
2026E: $31.31 (27.0% YoY)
2027E: $38.22 (22.8% YoY)

$ASML has a decent track record of meeting analyst estimates ~2 years out. HOWEVER, let’s be conservative & assume $ASML ends 2027 with $35.00*** in EPS (~8% below current estimates) & see its CAGR potential assuming different multiples:

29x P/E: $1,015💵 … ~15.2% CAGR

28x P/E: $980💵 … ~13.9% CAGR

27x P/E: $945💵 … ~12.6% CAGR

26x P/E: $910💵 … ~11.2% CAGR

As you can see, $ASML appears to have attractive return potential EVEN if we assume greater or equal to 26x EPS (below its 10-year mean, current multiple, & justified given its quality, moat & growth rate)

Today at $672💵 $ASML appears to be a strong consideration for investment, albeit with extreme volatility

Additionally, we have some margin of safety by relying on a lower multiple, lower growth rate

As I’ve stated before, given its volatility, however, it’s wise to piece into $ASML — this way, you enhance your margin of safety while also positioning yourself to “win-win” if the stock moves up or down in the short-term 💵

#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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⁠App Economy Insights
$NVDA NVIDIA's Q3 visualized.

How long can the boom last?

📊 Revenue trends.
🤖 The 'age of AI' in full steam.
🎙️ CEO Jensen Huang on AI scaling.
https://t.co/Uk2EU8RG0G
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