The Stocks I'm Ready to Buy on the Next Dip (a new one)

Hey everyone and welcome back to another video for today. So in today's video we'll discuss the potential buys when or if certain stocks pull back. Now of course we've had many many pullbacks earlier this year. Most of these pullbacks a lot of us did deploy cash then at certain points I mean how much cash can we have right? So many pullbacks not enough cash. Now, today's video, let's talk about some quality companies that yeah, if we do have a pullback for one reason or another, those will probably be very high on the buy list. Now, some of them we've bought more recently. Some we don't even own, we missed, you name it. Now, right now, Monday, Palanteer reports after hours. I did buy some extra shares before they report earnings. Why? Why take the risk? Well, cuz the position right now is still quite small. I know that the quarter will be pretty good, but I don't know what the stock's reaction will be, right? 3 months ago, excellent quarter acceleration across the board. You name it, stock was down, I believe, 6% or so the day after. Now, could it happen again? Yes, of course it could. My average is around $107 right now. So, I didn't really care that much to add. I think at around 20 extra shares of $125. So, the average went up by a tiny bit, but not by much. Now, of course, if the stock does go up tomorrow, then at least I don't have to buy at a higher price. But, of course, as you know, earnings, it's a gamble. The stock's reaction is a gamble. We've seen it time and time again. Good report, stock goes down. Bad report, sometimes the stock is flat. In this case, I said, you know what, small position, I don't want to own more. So, if it goes up, okay, great. At least I have my shares. If it goes down, the numbers are pretty good. I'll add more accordingly. So, wanted to get that out of the way already right now. Now, as for today, today, as you can see, pretty good day. And Meta is up 6%. Close to $590 per share. Amazon continues to go up. I believe it reached new all-time highs, up 4.7%. Microsoft continues as well here 3.8% at $482. Even Google is up 3.5%. Nvidia is up 3%. AMD is up 1.8. I believe Micron is flat. Was red before. Yeah. So, a bit redish, but let's call it a flat right now. So, a pretty good start of the week. Of course, AMD reports tomorrow. We have Uber, we have Shopify on Wednesday, Western Digital, SanDisk. plenty of companies will report their quarterly figures over the next couple of uh days. Now, I do want to start off, of course, with one of my favorite companies out there, and that of course is Nebus. Now, as you can see, Nebus is back above $200 per share. It's actually up close to 9% today. Now, Nebus, of course, a couple of days ago, you could have bought more shares at around $150, right? I thought I had the opportunity to buy the $150 last Thursday. Guess what? We woke up and this thing was up close to 30%. So, okay, missed opportunity. But, of course, I own quite a lot of Nebuse at a much much lower price. So, I was, you know what, missed the opportunity. That's not a problem because my big position just got even bigger purely because the stock went back up. But yes, ideally and they will report August 12th. Ideally, we get again good numbers and some of these names cool down and we go back down. Then I add more shares. Ideally, will that happen? I don't know. I don't have a crystal ball. Nobody has. And if they do, I'd love to buy it, but I don't think they exist. Anyways, Nebus is a $52 billion company. Now, I am working on a DCF for Nebus right now. The numbers look quite good, but I'll wait for the next earnings report in order to really make sure that all the numbers make sense. If guidance does change, then it could change, of course, some of the projections, but right now, even at $26, it's not the most expensive name out there, although some might say, "What? What do you mean?" Look at revenue for the last 12 months, only $877 million, $52 billion in market cap. That doesn't make any sense. Well, of course, it doesn't make any sense when you look at what the business was 12 months ago. But if you look at what the business is expected to do going forward, well, paying $52 billion for a company that's expected to generate $3.3 billion in revenue this fiscal year, 11.4 billion next fiscal year, and over $21 billion in fiscal 28, which by the way, I believe these numbers are way too low. These are analyst estimates. I believe these numbers are way too low. then no I don't think it is that expensive. Now in case you missed Sunday's video, we did cover this uh Morgan Stanley uh note where they talk about three frameworks with regards to this whole spending cycle AI cloud data center return on invested capital. So framework one is the hyperscaler GPU leasing, framework two is the model API owned infrastructure and framework number three is model API. As you can see, each one of those has a specific return on invested capital target according to them. We have framework one here at 31%, framework 2 at 46%, framework 3 at 25%. Of course, those are based on their own assumptions. And as we can see for framework number three, the model API on third party compute, they have here a base case, a bare, and a bull case. Of course, the token pricing per million will vary, right? We don't know if it's going to be $1,1 175, $250. We we just don't know. That's why you have here three types of scenarios. Of course, if it's $1, then you're generating $23.1 billion of revenue per gawatt. Compute lease cost is 27.9 billion, which means EIT margin here is going to be negative. Now for the Nebus case specifically of course we know that Nebus is looking for around what was it between 20 to 30% EIT margin over the long run or medium to long term and when they said this people say oh that doesn't make any sense it's BS well look when you look at these numbers these assumptions here you look at their return on invested capital you look at the EBIT margin here it's not that crazy to think that yes, Nebus could be an insanely big company generating well above $50 billion in revenue by the end of the decade with EBIT margins of above 20%. It's definitely possible. And then when you look at okay, the business is now at $52 billion in market cap. If they can generate $50 billion in revenue four years down the line at these margins, yeah, then then it is quite cheap. Of course, we are still very early in this whole buildout cycle, but I do think that 2027 is the year where you're going to see a lot of these players and abuse a core reef, but also Azure, Google Cloud, AWS. You're going to start to see the core profitability of these business segments. Of course, the others have other business segments under their, let's say, mother company, but because of the payback time and all of it, I do think that 2027 is the year, might not be early 27, but 27 is the year where we're going to have a better sense of things. Of course, hopefully by then, Entropic and OpenAI go public and then we'll actually know exactly how much money they are making, how much they're burning, maybe how profitable one specific model is over another. So for Nebus if we do drop lower if we can revisit 150 that would be a very big gift and this time I will not miss it and if not then not that's also okay. Moving on to the next one and the next one is a company that we covered a little bit more of the past month or so. That's a company I do not own and that's Microsoft. Now Microsoft yes is or was definitely a no-brainer. Of course hindsight is 2020 but I mean we covered this. You can go and look at that yourself the video. There is also a DCF that's available to all of you. We'll look at the DCF again in a bit. Microsoft, by the way, you see this bottom right here. June 25th, $352 per share. This is the bottom for Microsoft. Guess what topped at the exact same day? Micron. Micron topped when Microsoft bottomed. Does it make sense? I don't know. But the market is funny this way. Microsoft is up over 30% since while Micron is down almost 30% since. It would have been a genius play if you sold your Micron and bought Microsoft on that exact same day. Now Microsoft right now 3.5 let's call it $3.6 trillion trailing PE 27 times. But let's look at the forward one based of course on analyst assumptions 24.6 times PEG ratio 1.5. Now of course with Microsoft they just reported their quarterly figures. The reason I'm putting Microsoft here despite me not owning any shares of Microsoft is well if we do again get the opportunity to buy a Microsoft closer to $400 per share which can happen might never happen and that's completely fine. Then maybe does deserve a spot in the portfolio. Maybe it will take the spot of a micron in my portfolio. Who knows? But Microsoft, yeah, it's probably one of those names where you knew it was a no-brainer, but you didn't know it was going to go up so fast in such a short period of time. Of course, since their all-time highs, stock is still down, but the company is doing, I believe, better than what the market thought it would be. And what's interesting here is despite the size of this company, you can see that revenue is expected to grow at 17.7% this fiscal year and then accelerate over the next two fiscal years. 19.1% in fiscal 28. They're already in fiscal 27 right now and then another 20% in fiscal 29. An acceleration in growth for a company like Microsoft. It's quite interesting. Now if we look at the DCF right now we see that based on my own assumptions and again all of this is available to you for free. You can go and have a look at the link below. You can play around with it. Do whatever you want. There is 18.3% upside to reach what I believe is fair value. Now my assumptions are as follows which you can see right here. We can look at the base case. We can look at the bull and the bare case. So the base case I have here again the assumptions of the market but then I do have a quite steep I'd say deceleration in growth by 2030. I don't know what will happen in 2030. You can of course make sure that the growth here slows down much slower. Instead of going down from 20% to 14.4 you can make it go from 20% to maybe 17 or 18 or something like that. But you know what? I've put these numbers in and if they do better that's great. If they don't that's also good. I have some margin of safety and again this is for the base case. We see a bit margin reaching 50% by the end of the 10 year. Here we have free cash flow margin close to 40%. And this mean that in total by fiscal 2035 they're expected to generate $971 billion of revenue free cash flow to the firm of 387.5 billion. Could they do more? Could they do a trillion dollars by then? It's definitely possible. In the bull case they are doing more than a trillion dollars by fiscal 2035. In the bare case they're doing $855 billion. But of course, as you can see, I'm putting only 15% probability of a bare case, 55 on a base, and 30% on a bull. And look, I rather be too conservative than too optimistic or too bearish and be burned either way. Up next is a name that I bought more shares of actually last week. So, yeah, forgive me for the title, but I just had to put Meta back into this video. People just don't seem to understand Meta right now. The stock, yes, year to date is down close to 9%. But as you can see, it can have days where a company like this is up 6.5%. It's a $ 1.5 trillion company, which is very close to what SpaceX is worth right now, which makes absolutely no sense, but okay. Trading PE 22.3 times, forward one, 18.8 times, peg ratio under one. To me, this makes absolutely no sense at all. And I'll show you something that I posted on X a couple of days ago. Meta Score business is easily absorbing its massive infrastructure spend. The last 12 months, total revenue reached $228.2 billion, up from $120.5 billion Q1 2023. That's nearly doubling topline revenue in 3 years. AIdriven content recommendation and smarter ad targeting continue to drive higher conversion rates and ad pricing across the family of ads. Now, if we go and look, of course, at operating profit, despite capex tripling, which we'll look at in a bit, Meta's last 12 months operating profit exploded from $28.7 billion Q2 2023 to $86.9 billion Q2206. Total profit growth 203.1%. That's a compound annual growth rate of 44.7%. Look at this. Now, of course, when you go and look at capex, yeah, capex has increased at a total increase of 186.9% in 3 years. Compound annual growth rate of 42.1%. It's expected to reach between 130 and $145 billion this year. But again if you look at the revenue growth if you look at the operating profit the business itself is doing extremely well. So once we do reach the peak of the capex cycle it's of course a given that this name will just skyrocket because suddenly people will realize oh actually it is quite a profitable business or actually all of these investments have made the core business even better. Now, before going and looking at the DCF, one thing that they mentioned during the last earnings call that might have been overlooked by a lot of people, you can easily track it back, of course, by going to fiscal.ai. You go here to the transcript, you get this. You can search for, for example, did they mention WhatsApp? Yes, they mentioned WhatsApp 11 times. You can ask for custom summaries, AI summaries, you name it. Of course, there's a link in the description any comment. You'll get 15% off. If you're a new user, you'll also get two weeks of fiscal pro for free. And so what do they say here with regards to business agents? They made Meta business agent available globally this quarter on WhatsApp and Messenger. So one quarter and there are already more than 1 million businesses using them to talk to their customers or complete sales every single week. This is insane. We're ruling business agents out on Instagram now, too. So, it's not like they're investing in, oh, we we don't see any products, nothing. No. In one quarter, a million businesses are already using business agents. And this is why Meta focuses so much on aic capabilities. They continued by saying, "We're building more Ajentki capabilities to summarize all these conversations, digest what happened overnight, and surface what consumers are asking for. Soon, it will go further, including suggesting ways to grow your business, giving you competitive intelligence and real-time insights into what's working and what's not. Over time, we'd like to build this into a business in a box service that can help you start and run a whole business using Meta Platforms." Again, you want to see how they monetize AI. This this is how they'll monetize AI. Looking at the DCF, we have, of course, again, the bull, the base, and the bare case. The bare case here is 9.7% downside. The base case 43.3% upside. The bull case close to 90% upside. And so, if we look at the weighted probability one, we are expecting 46.5% upside. Shares should be around $861 right now. I kept saying this time and time again. This is a sub $600 stock that should be trading above $800 per share. This is a company that I'm expecting will generate around $691 billion in 2035, $476 billion in 2030 with free cash flow to the firm of around $7.3 billion. With regards to the bull case, I have here over $56 billion in revenue by 2030 and $83.6 billion in free cash flow to the firm. As for the bare case, by 2030, $450.9 billion in revenue, $39.5 billion of free cash flow to the firm. Basically, what happens here with the bare case is they cannot monetize it, right? They cannot monetize AI. they cannot monetize all of the spending that they're doing right now and over the next couple of years, which is the same actually for the Amazon DCF, the Microsoft, the Google, you name it. I've said it before and I'll say it again. When you will see Meta stock above $600, $700 consistently, you will see how fast sentiment will shift, whether it's from retail investors or Wall Street, but the business itself will just continue to do what it has been doing for a while. But since the stock is going to be higher, suddenly suddenly it's going to be a tremendous business to own just because the stock is higher. Last but not least, and I'm sure you can already pick up the pattern here, these aren't small companies. Those are wellestablished, very profitable companies. And of course, I have to talk about Google. Google Alphabet was around $300, $310 per share, not that long ago. Year to date, it's still doing very well, 17.2%, $4.5 trillion in market cap. Of course, trading P is very low, but that's including these one-time uh pumps as they call them. Forward one is at 27.8 times. Now, same thing here with Google Alphabet. In my opinion, every single time they report, you just notice how good of a company and how profitable of a company this is. You don't have to see, oh, what might happen 5 years down the line? Will they be able to monetize this? What about Quantum that? Right? People are still talking about these quantum computing companies as if as if these are the next revolutionary things that you should always have in your portfolio. No, you should definitely not. If you want exposure to quantum computing, all of these big tech companies have a quantum computing although very very small business segment or so inside their company. Right? People still talk about oh D-Wave and ion Q and Regetti and this and that right as of right now as of right now what are the useful applications for quantum computing and even let's say couple of years down the line are there this many applications that quantum computing can become a hundred billion dollar business for a company for now no for now no drug discovery definitely yes okay that's already starting right now although very very small because well GPUs are doing the majority of the work and that's already working quite well. Of course with quantum computing you can accelerate things but when you think about this there aren't that many applications there aren't that many applications. So, every time I still hear people talk on YouTube or whatever about quantum computing, either they don't know what they're talking about, two, they just want to farm views. And three, most likely they're pumping something that either they're getting paid for or they own it, but they bought it at a much higher price. So yeah, you want quantum computing exposure, just go with a Google, just go with a Microsoft, with an IBM, with with all of these companies that are generating billions of dollars in revenue and profit from a lot of other businesses and they're still working on what could be the next bet. Okay, just putting it out there. Going back to Google here, Google, of course, as you know, last quarter, we'll look here at the cloud segment because that's what's pushing this name higher and higher. Although all the other segments are doing extremely well. Now the Google cloud segment as you can see continues to accelerate. We have here 81.8% growth. Nice acceleration already. This is the fourth quarter in a row. Well actually more fifth quarter in a row where we're seeing acceleration in growth for Google Cloud which of course is also followed by a margin expansion. This is something that we've been talking about for more than a month. Now, I will also show you something else here. Let me just pull this one up first and hide this for now. So, we have here margin expansion 35.5% margin for Google Cloud growth acceleration. Wonderful money. Incredible business. But what was the risk before? The risk before is of course oh search dominates and so if search gets to zero which is stupid to say but let's just uh go with it. What's going to happen with Google? Well as again as we've been discussing for more than a year as you can see search as a percent of the overall revenue has been coming down slowly but surely. But more recently you can clearly see that the rest of the business is picking up. The rest of the business is now at 46.7%. Search is at 52.8. 8%. It's just a matter of when, not if search comes closer to 50% and might even go under it. Why is that? Well, cuz Google Cloud is such a huge business already, very profitable, but that's just growing so much faster than the rest. And so, I wouldn't be surprised. I wouldn't be surprised if a year from now we're looking at this and we see rest of the business is above 50%. Now looking at the DCF here for Google, I would love if we go back as close as possible to $300 per share or if the stock stays flat, but the business continues to do much much better than expected. Cuz right now, basically here, the upside is 13.3% to reach what would be according to me fair value for this business. Uh this is a business where I'm expecting at the bull case to generate just over a trillion dollars in revenue in fiscal or by fiscal 2030. The base case is quite close to $900 billion and the bare case $865 billion. Could they do better? Yes, they could definitely do better. But as of right now, I already own quite a lot of shares of Google have been owning for a while. And so for me to add more, I would love to add more at either a cheaper stock price or maybe a much cheaper valuation, whatever happens first. And of course, in the meantime, if it doesn't happen, then there are plenty of other positions in my portfolio where I'll gladly add more, right? As we've been doing, what I've been doing for the past couple of weeks, I've added more to a SoFi, to a Meta, to a Reddit, right? I've opened a position in Palanteer in Axon not that long ago. Those are doing quite well. Uber report later this week. We'll see what happens there. There's still the local. Hey, who knows? Maybe Micron, right? Because we do have SanDisk and Western Digital on Wednesday as well. So, it's not like I don't have options to add to other positions if this never happens. Right? This is important to note. I would love to add more at a cheaper price, but if it doesn't happen, it doesn't happen. It's completely fine. It's a luxury problem to have. So all in all, that's about it for me in today's video. Of course, we'll cover as many companies as possible. Tomorrow after hours, we will go live AMD reports. Then on Wednesday, it's a pretty big day. We'll see what happens there. But yeah, all in all, that's about it for me in today's video. See you all in the next one. Bye-bye.