⁠Hidden Value Gems
That would be nice 🙂

John Elkann plans to appoint Luca Maestri, the outgoing CFO of Apple, as the new CEO of Stellantis.

$STLA
#Exor

via @Reuters https://t.co/wGx5u9Gwaj
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⁠Stock Analysis Compilation
Artisan Partners on BIM $BIMAS TI

Thesis: BIM’s private-label dominance positions it as a key beneficiary of Turkey’s economic reform trajectory.

(Extract from their Q3 letter) https://t.co/PAozXuK2jo
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⁠Stock Analysis Compilation
Hotchkis & Wiley on Unilever $ULVR LN

Thesis: Unilever’s strategic focus on efficiency and spin-offs positions it for steady growth and shareholder returns

(Extract from their Q3 letter) https://t.co/6124cvlQCf
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⁠Startup Archive
Vinod Khosla on the right way to execute a business plan

Vinod Khosla, who founded Sun Microsystems and Khosla Ventures, likes to say:

“Be obstinate about your vision, but be really flexible about your tactics.”

He explains what he means by this:

“It’s important to have a vision of where you’re trying to go, but how you get there is a series of experiments… What entrepreneurs do is effectual reasoning. They have a big vision, but they don’t try and get there in one leap… You take a step in the right direction so you can garner more resources and then try the next experiment… You try and garner resources for the next step, every step — not do the whole thing in one step.”

This, Vinod believes, is one of the reasons raising too much money can lead founders astray:

“People who raise too much money get too much confidence in their own plan, which is normally BS. The right way to do a business plan is flex-planning: have a vision, but plan the next 3-6 months to test every assumption you have. A business plan is about testing every assumption. Even if you’re sure it’s true, test it if you can in the marketplace by running an experiment.”

He gives another analogy for the point he’s trying to make:

“You want to shoot for Mount Everest, but nobody ever got to Mount Everest without getting to base camp first. You build a base camp of a stable place where you’ve learned a lot and where you can tread water for a while… Maybe you get to cash flow breakeven at base camp. But you want to set up base camp where it helps you scope out the path to Mount Everest.”

Video source: @StartupGrind (2015)
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⁠Dimitry Nakhla | Babylon Capital®
4 months ago I stated:

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

Since then, $CRM shares gained +52% ✅

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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⁠Value Spotlight (Andrew Sather)
How to Find Management Who Are Aligned with Shareholders - Using ROIC (Tutorial)

PSA New Constructs posts a list of these companies monthly if you have their pro plan, check it out @NewConstructs

Long $BLDR 😉 https://t.co/ScaEHitCxU
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⁠Stock Analysis Compilation
Hedge funds' best ideas #21 is in your inbox 🔥
(link in bio)

Includes links to the Q3 letters from Acatis / Ace River Capital / Artemis / Artisan / Atai Capital Management / Ave Maria Funds / AVI / Cooper Investors / Desert Lion / Hardman Johnson / Heartland Advisors / Longleaf / Optimist Fund / Saltlight Capital / Sound Shore Fund / TCW
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⁠Quiver Quantitative
$SKI has now risen 167% since we posted this report yesterday: https://t.co/hbwv5D3izl
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