Zoetis ZTS - 15% Yearly Returns For The Next 15 Years?

Good day, fellow investors. A lot of questions about Zoetis, the pharma company for animals. And of course, when there are a lot of comments, it means the stock is down, and this one is down significantly. On top of that, Michael Burry has it as a fat pitch, which means 15% possible returns for the next 15 years per year. That means you double after five, double after 10, and then double again. That's an 8x. So, the risk and reward is very interesting to check this. On the short term, he sees also as a rotation play into value as the AI boom turns into bust and the money flows into more valuable companies. They did a convertible buyback at 120, spent a lot of money, but Burry says it's still value. The company says they don't know when US markets will stabilize, 6, 12, 18 months. That's something that Wall Street hates, uncertainty. But, there is buybacks, dividends. Burry also looks at the volume and the traded amount of stocks. So, all those growth gamblers buying a few years ago have now been washed, and now we have different investors owning the stock. On top of that, high return on invested capital quality fat pitch investment. By the way, if you want to learn more about value investing, my new handbook that covers most of the things you need to know to compound for the long term is out. Check it on Amazon in the link in the description below. Let's see if Zoetis can be the piggy bank for your future. Guidance has been revised a little bit, just slightly down revenue, net income, still profitable, still great returns, still great margins. Everything looks good. Adjusted earnings per share six, reported okay, 5.5. But if we look at the history, slow and steady growth as the market grows, net income growing, everything looks good. Capex stable, growing a little bit, investing into new drugs. Two drugs expiring, the most important 2030, 2042. 12 new in the pipeline, so interesting. Repurchase focus, they borrowed some money to do that with convertibles because they saw it as very valuable. Stock went down a little bit more, but okay. Focus is on buybacks, returning cash to shareholders, a dividend is there. When we look at the cash flows, with the weakness, 2 billion per year, more for buybacks, a little bit less for the dividend. 2 billion on the 42 billion market cap. There is the dividend yield, the buyback growth. Okay, but all of that with a P ratio of 12 looks cheap. Because if we look at the market projections, those are always linear, but the growth of just the market for veterinary medicine is projected at 10.73%. It is an oligopoly, three players, interesting to look at. And if we look at not 10% growth, but 7% growth, plus buybacks, plus the dividend, that's already 12% On top of that, we have to think about the high return on invested capital, unloved by the market, so Burry loves these crashes and then buying these stocks that he has been following for years on the cheap. If we have to put it on our quadrant, let's put it here. So, 12% should be a little bit more here, but to be more conservative, 10% market-like risk. So, I am crowding a little bit the value side of the value investment quadrant, so we can follow it over time. So, to conclude, it sounds very interesting. Pharmaceuticals, you have to always accept a little bit more of volatility there. A drug doesn't get approved, a this, a that, something else, a competitor makes this. So, you will have to accept this. You can see it here, volatility there. It will continue, but if you want a good business, high return on invested capital, good position, profitable, growing, good market, everything good, detached from AI bubbles or things like that. Perhaps with AI they can even improve things a little bit. That is something very, very interesting. I understand Barrick's position here looks like a buy. We added it to the quadrant, and over time we'll learn more, understand more, and who knows, perhaps the market will give us even better opportunities.