Value Is Hiding In Plain Sight
Whether you’re investing in hyperscalers, neoclouds, semiconductors, or energy stocks, it’s all about AI. The AI buildout is driving growth, margin expansion, and higher stock prices.
But I’ve been uncomfortable with the footing that trade is built on, given the debt even hyperscalers are taking out, rising interest rates, and lack of moats.
So, I’ve focused on what I think are more durable businesses with a strategic advantage trading at a reasonable price. And the deals today are looking better than they have in years.
More on that in a moment.
Finding Value
Themes are a big trend on the stock market today. Investors are chasing the story of the month and then moving on to the next story with little regard for whether a business is performing well or not.
We saw this with nuclear and quantum stocks last year, bottleneck stocks earlier this year, and now it’s picks and shovels that are “clear” winners of today.
Amid it all, we haven’t seen the kind of financial returns and disruption you would have guessed a few years ago when AI hit the scene. And I would argue some “disrupted” companies have come out stronger. But the market hasn’t seemed to notice, and there are some incredible values today.
Below are the biggest companies with a P/E under 20x, 3-year revenue CAGR of 10% or more, positive net income, and a stock that’s down over 10% YTD. In other words, a screen of cheap compounders. It’s a who’s who of Asymmetric Investing stocks…
$Uber(UBER)$ $Booking Holdings(BKNG)$ $PDD Holdings Inc(PDD)$ $Adobe(ADBE)$ $Intuit(INTU)$ $Royal Caribbean Cruises(RCL)$ $Boston Scientific(BSX)$ $Roper(ROP)$ $Carnival(CCL)$ $Las Vegas Sands(LVS)$ $Trip.com Group Limited(TCOM)$ $First Solar(FSLR)$ $PTC Inc(PTC)$ $Dick's Sporting Goods(DKS)$ $Deckers Outdoor(DECK)$ $Globus Medical(GMED)$ $On Holding AG(ONON)$ $Wynn(WYNN)$
BTW, I did pull out most bank and financial services industries because they typically have lower multiples.
What you might notice just looking at the P/E ratios and the 3-year growth rate is that there are some great opportunities on the market today. Not every stock will be a winner, but this is a great place to start looking for asymmetric opportunities long-term.
Remember, stock market performance will be driven by three things:
-
Revenue growth
-
Margin expansion
-
Multiple expansion
Each of these companies has revenue growth at its back and the opportunity for multiple expansion.
What the market is questioning is whether revenue growth is sustainable and the future of margins. These are the “disruption is surely coming for them…right?” stocks. And if disruption isn’t coming, this is a buying opportunity.
Amid all of the noise, I think we’re seeing some great opportunities in the market in companies we will look back on as “obvious” a year or two from now. And that’s where I’ll be buying stocks over the next few months.
Markets are always moving - and sometimes, the best move is knowing what works for you.
With Treasury yields, oil prices and rate expectations keeping markets on edge this week, investors are once again thinking carefully about where to position next. There’s no one-size-fits-all choice in investing — and the same goes for Tiger Merch. This month’s hot picks are in, featuring the Tiger Toiletry Bag, Universal Travel Adapter, Tiger Umbrella and more favourites chosen by fellow Tigers.
Explore the Monthly Hot Picks in Tiger Coin Mall, now 12% OFF for a limited time.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
