3 Stocks You’ll Wish You Bought Sooner

Hey everyone, welcome back to the channel. I'm here with Neil today and we're going to be covering three stocks that we think some investors might wish they bought sooner. These are companies that have [music] had pretty significant run-ups over the last few years. Uh that's the point though. I mean, you look [music] at the pattern behind quite a few of these companies, visible well before the stock took off. But these are [music] quality businesses that we still think could add a lot of growth to investors portfolios over the long run. So, we're going to [music] walk through what's actually driving these businesses forward. Um, and you could judge for yourself whether you think the story's [music] played out or whether the market is still playing catch-up. Hey everyone, welcome back to the channel. I'm here with Neil today and we're going to be covering three stocks that we think some investors might wish they'd bought sooner. These are companies that have had pretty significant run-ups over the last few years. Uh that's the point though. I mean you look at the pattern behind quite a few of these companies visible well before the stock took off. But these are quality businesses that we still think could add a lot of growth to investors portfolios over the long run. So we're going to walk through what's actually driving these businesses forward. Um and you could judge for yourself whether you think the stories played out or whether the market is still playing catch-up. All right everyone, let's dive right in. I'm going to cover the first stock for today's video. That's Transstein Group. So, this is not a household name. Really interesting business. If you're not familiar, uh, Transime builds the small proprietary parts inside airplanes. [snorts] So, uh, latches, hydraulic valves, pumps, ignition systems. This is a company that was founded in the 1990s with backing from a private equity firm called Keelso and Company. And his strategy for many years has essentially been to acquire businesses that make proprietary soul source FAA certified parts and then run them for cash instead of growth. So since the company held its IPO about 20 years ago, Transime Group has made more than 100 acquisition acquisitions across uh its three segments which are power and control, airframe, and then it has a small uh non-avviation segment. But essentially, aerospace and defense make up about 95% of the company's revenue across three channels. It's making new aircraft sales to Boeing and Airbus for parts, aftermarket replacement parts to airlines. It has sales to the US uh and allied militaries. So, this is a really really interesting business. You know, when a part on an aircraft is FAA certified, that certification belongs to one specific manufacturer's design. And if an airline needs that part replaced, the mechanic can't shop around. They need a the exact certified part. So Transime has built roughly 90% of its portfolio around exactly this kind of sole source part. Um and right now that pricing power is meeting real tailwinds. We're seeing Boeing and Airbus that are ramping up production after years of supply chain disruption. Commercial air travel is growing. You know, it's generating more aftermarket replacement demand. Global defense spending is also on the rise. Essentially, this means that Transdime's channels are growing all at once. There's another side to the business that's really fascinating besides the uh you know aviation and aftermarket part business and that's the space angle. So part of its power and control segment actually makes the actuators and controls that are specifically needed for space applications. So satellite and space system suppliers are key customers. So this isn't just a a company that is you know supplying parts for uh commercial jets or or fighter aircraft. And this is really interesting because Transdime recently uh bought Stellant Systems. This is a company that is the only US manufacturer of space qualified traveling wave tubes. It supports Airbus's oneat satellite line. Now the deal had fallen apart uh after the department of justice signaled that it would sue to block it. This shows that the interest that Transdime has in continuing to expand within this space and so I think we're going to continue to see probably more proposed deals from Transdime moving forward. Real quick, a couple financial numbers for the business. So Transdime in their recent fiscal quarter Q3, they reported net sales of about $2.7 billion. That was up 23% year-over-year cash flow of just under $900 million for the quarter. They've generated over $2 billion in free cash flow year to date. So essentially, this is a business that's like a toll road in the aerospace industry. It owns the certified design parts for airlines, the military that have no real alternative. All of its core end markets are growing in a very favorable pace right now. There's the space angle, which I think Transdime is still really working to find its place in, especially after that failed acquisition I named. uh fascinating company to watch and one that's not maybe talked about as much. So, Trans Giant Group, maybe check it out. >> I'll be very honest with you, the moment I saw the name of the company, as I said before, I thought this was another medical stock, Trans. I was like, okay, like Transmedic. But no, very interesting. It's a $61 billion company. And I would have maybe assumed that the margins aren't super high, but over the last 12 months, I see here gross margins of close to 60%, operating of 46, net 21.3, free cash flow margin of 19.3, a forward PE of 23.9 times. So it's definitely a very very interesting name. Aerospace defense spaces, I would say sort of a cool option for them. But yeah, if you're interested in that space, pun intended, I do think it's it's one that's maybe worth looking into, especially I mean it is down 17.6% year to date. So not at all-time highs unlike many other names out there. >> Yeah. And and there's a few reasons for that. I mean there's been scrutiny both from the regulatory side as well as politically for the business. This is a still a company that essentially found a regulatory structure decades ago in how aircraft parts get certified and it's built one of the highest margin business models in the industrial space around it. One thing to note if you're an investor, you know, Transdime runs on debt. That's a deliberate part of its model. They had about 34 billion in total debt. Uh their net debt to IBATA rose to about 5.8x. That's near the top of its historical range. This is just how the business runs. This is historically how it has operated around its various uh growth segments. So something to watch uh if you're interested in this business, but I do think it could be an interesting time to buy on the dip. Although if you look at the stock's performance over the last five plus years, uh it's had quite the runup. >> Agreed. I will jump into my pick, which is a stock that also had quite a runup over the past 12 months and maybe even the last two years. And that's Micron. Micron Technologies is a company worth around $1.1.2 trillion depending on on when you're watching this video because the the stock price does fluctuate quite a lot. Now you might think that you missed the boat on Micron because it's up so much. But if you look at the bigger picture, if you look at the AI capex super cycle that's happening right now, projected numbers for this year is just over a trillion dollars. For 27, that's closer to 1.4 $1.5 trillion. And then yes, the growth is expected to slow down to reach around $1.6 $6 trillion in 2028, which when you think about this, the these numbers are are mind-blowing. A lot of those dollars are flowing towards, of course, Nvidia. But even if you look at Nvidia, Nvidia's gross margins are expected to take a short-term hit because of memory prices that have gone up, which of course is a positive thing for Micron. Now when we look at micron we always think about okay micron memory name it's usually cyclical and yes I would agree if if we go back and we look at what happened over the last 15 years or so you can see upcycles and then you see the eventual uh down cycle now you don't even have to go back 15 years in 2023 free cash flow was negative in 23 which was just 3 years ago in 26 it's expected to be $25 billion maybe a little bit But in 2029, the estimated numbers are $185 billion. So let's say let's say we do peak in 20 at the end of 28, maybe 29. To me the the story here is very much different because there was no no period like this for a memory name where they were generating over hundred billion dollars in free cash flow in in just one in just one year. Now why is that good? Let's say we do go into a down cycle. Well now we go into a down cycle and that company just has an insane amount of cash left. They could, I don't know, issue a dividend, buy back shares. By the way, as of right now, they're not allowed to buy back any shares until December. I think mid December, early December, they will be allowed to buy back shares. And with a forward PE that's under 10 right now. Gross margins are as of last quarter above 80. I think operating margins are also close to that as well. I don't believe that they'll stay this high for the foreseeable future. But still, if they see that the stock for them is extremely cheap, you can be sure that they'll issue a buyback. They might not even wait for the first, let's say, first quarter of 2027 to announce a share buyback program. And as of right now, the memory names are actually expected to generate more free cash flow than all of the big tech companies combined, which is a which is an interesting dynamic as of right now. But why is Micron still on the list right now? Which, by the way, Micron reports earnings next week. It's going to be very interesting. They're expected to grow revenue by around 351%. So 351% that's $51 billion in revenue generated for the fiscal year. They're expected to grow revenue by 200 let's call it 250% next fiscal year by 90 and the fiscal year afterwards by just 13.6%. So you can clearly see that the analysts right now are expecting growth to decelerate significantly. It might happen. It might also not happen as fast as what the analysts are expecting. And that's probably why the stock is not getting such a high premium, right? A company that's growing so fast, super profitable, why is it still trading at a singledigit forward PE doesn't make any sense. But as we know, the market is always forward looking. And so maybe the market is already looking at 2029 28. Maybe that's when growth will slow down. Now, I've always made the case that yes, capex growth is going to slow down. Yes, all of these companies, all of the hyperscalers, all the chipmakers are going to optimize for memory use to be more efficient because well, obviously they do not want to pay a premium forever. But that doesn't mean that Micron and SK Hinings and Samsung can't continue to grow. Yes, margins might come down, but I do still think that the dollar amount collected will continue to go up and up and up. And if at the end of the day, the dollar amount collected that stays in their pocket becomes bigger and bigger, I think they'll take it as as a huge win. Now, as of right now, we know that HBM, which is high bandwidth memory, which is what AMD uh Nvidia, all of them use in their huge uh GPU clusters, that's sold out for 2026. They see supply tightness expected to persist beyond 2027. Their total addressable market estimate for the HPM market is over $100 billion. And they told us that over 75% of 2027 DM demand is expected to come from just this AI buildout. So if you believe that you're too late with Micron, just remember that they're now in the numbers. they're experiencing accelerated growth and the numbers just become bigger and bigger and I do think that once we reach the peak of this super cycle they will be sitting on a mountain of cash which means that again they could issue a dividend they could buy back shares or they could invest to make sure that in the down cycle they are just getting stronger and stronger. I think the thing that's interesting is you look at how much the business profile of a company like Micron has changed and a lot of that goes back to the industry, right? How much the industry has been transformed over this last couple years. I mean, this is kind of an entire category of businesses that have been repriced. I mean, the the memory space was kind of for a long time this textbook example of an industry with minimal pricing power. You know, you had a lot of the pure commodity economics. there were these boom and bust cycles and that was sort of just par for the course if you invested there and what we're seeing and of course there's still some debate about whether memory is stopped behaving like a commodity or not but it is the case that it has become one of the key bottlenecks for building AI systems and Micron of course has continued to be one of the few companies really positioned to capture that shift and to help you know loosen that bottleneck so to speak so it's not just it's not so much the fact that Micron is running the business better. It's really that the structure underneath the entire industry is changing shape. And I think it's a quality business, but it's one that has seen a completely different, you know, growth profile, especially in these recent quarters than, you know, if you've owned this stock a long time, you know this uh than what it was a few years ago. So, you know, I think the thing for investors to watch is this is probably a stock that's going to experience uh some significant volatility as we see potential, you know, peaks and valleys within the AI buildout. I think that this is a durable long-term trend, but I do think it's very likely that we might see a slowdown at some point, especially with a lot of, you know, the recent discussions that have been happening within the AI space um about safety concerns and otherwise. So I think that that is something that's likely to happen, but I don't think that in the long run the buildout is really going to slow down that much. Um perhaps just you know the appearance on the surface. So Micron's a fascinating business. I think uh to play that space, but I do think there's needs to be an understanding that if you're betting on AI memory demand, you know, this was historically a space with a lot of boom and bust cycles with the AI component less. So there's probably still going to be some big dips there, but I think over the long run, it's a great business. >> Yeah. And as I said, next week earnings report, that's going to probably be one of the first times where Micron does lead this whole story. Although some might say that even last quarter they were the leader of this AI story. But I do think that right now with the sentiment around the AI story being a bit more shaky, I think next week could be could be a very very important moment for the company, but definitely also for the overall AI uh industry. So stay tuned for that. We'll probably cover the earnings report as well in the next week. >> Yeah, absolutely. Well, with that, I'm going to hit the third stock in today's video. Marll, you know, this is a business that I think a lot of investors have been paying extra close attention to the last few years with the AI buildout. But, you know, it's interesting. This is another one of those companies that this was not always the story. You know, this is a a company that was founded in the '9s. Uh, for most of its history, it was sort of one of those solid chip designers for storage and networking, but not the most exciting or glamorous business. And then it made a couple of acquisitions that really changed that. uh it acquired a company called Cavium in 2018 that brought in networking and data processing chip technology. Then in 2019 it acquired a business called a Vera Semiconductor. That was Global Foundaries former custom chip design unit. What that did is it gave Marll this really deep expertise in designing custom AS6 to build to a customer's exact specifications. And so essentially that has built it into the business that you see today. You know, we saw also recently that Marll sold its automotive and industrial Ethernet unit to really free up engineering resources to focus entirely on AI data center chips. So this is a business that's gone through a real transformation over the last few years and you compare it to say the likes of Nvidia. So Nvidia sells general purpose AI chips that any customer can buy off the shelf. Marll designs a custom chip built to one specific hyperscaler's exact workload. So we've seen a lot of the the big cloud companies, you know, the Amazon, Microsoft, Google, uh the hyperscalers decide they don't want to depend entirely on Nvidia for their AI computing needs. You know, partly for cost reasons, partly to avoid giving one supplier that much leverage over their business. But the reality is that designing a cutting edge AI chip from scratch, it's one of the toughest problems in the chip industry. So hyperscalers had needed a partner who knew how to do it and Marll became one of a small handful of companies with that capability. You know, they have a multi-year collaboration with uh AWS. There's deep involvement in Microsoft's custom Maya AI chip. Uh they expanded their partnership uh with Alphabet recently. Actually, Google received a warrant to acquire up to 7% of Marll's shares tied to specific revenue milestones. Um, and Marll's electrooptic business, it makes the components that physically move data at the speed that AI training clusters require. So, that means that Marll is profiting from the AI buildout in a few different ways. both from the custom chip design space as well as from the actual physical buildout, the challenge in moving data at the speed that is needed with these new AI components. So, it's a really uh kind of fascinating fig to watch. I mean, I think a lot of investors have been paying attention to Marll, especially over the last year or two, but if you take a step back, if you followed this business for a long time, this is not the story, the growth story that was there up until very recently. I mean it was a quality business but it was a much slower growth business. You fast forward to now you know the recent quarter record revenue of about $2.8 billion that was up almost 40% year-over-year. Data center revenue uh comprised about 2.2 billion of that total. So most of its revenue that was up 46% year-over-year. Data center revenue makes up about 80% of Marll's total revenue. They raised their outlook for the fiscal year. you know, they're continuing to see really incredible growth. I I would say, you know, if you're looking at Marll, obviously, this is a stock that's had a significant runup. Not saying that this is an undervalued business by any means, but they really sit at the center of one of the biggest shifts that's happening in AI hardware, and that is hyperscalers diversifying towards custom silicone design for their specific workloads. And it has these relationships with three of the biggest cloud companies on the planet. And so that bakes a lot of resilience into the growth story. Uh there you look at a company that went from kind of a hard drive chipmaker to one of a handful of firms that hyperscalers trust to design their most important AI silicon. And I think that makes a a pretty compelling case for why Marll is an intriguing stock to to buy and hold for the long run. >> Yeah. And it's a it's a pure growth story. Uh if I look at the growth estimates for the next couple of years, fiscal 27 which is the fiscal year they're in, 47% growth in revenue, then 51 the year after that and then another 43.6% in fiscal 29. So the growth there is definitely quite high and is expected to continue to be quite high for the foreseeable future. What's also interesting is Nvidia actually partnered up with them and invested $2 billion into Marvel earlier this year for for their networking side of things. But yeah, Marvel I think Jensen also said that Marvel could reach a trillion dollars or so and on that day uh the stock actually pumped quite quite a lot. I guess everybody's trying to talk their book, but yeah, um they are that that player where you could say everybody wants to diversify away from Nvidia. I think Nvidia saw that as well, which is also why they partnered up and invested in the company. >> Uh so, it's a win-win for them. But yeah, Marll, I think a year or a year or so ago, this name was trading below $100 per share. There were rumors that Amazon might uh might just leave them behind and go with Broadcom. Now we see that Marvel is gaining quite a lot of traction. Stock is up quite a lot. Revenue is accelerating. So definitely another very big winner here in this whole AI space. >> Yeah. And that's the thing. You know these stocks that we've talked about today, Transime Group, Micron, Marll, these are businesses that have had, you know, significant run-ups over the last few years. But there's a growth story underneath that. You know, we talk about how important it is to look beyond the stock price. Valuation is important, but it's important to look at the growth story underneath to see whether that valuation is justified. And I think these are three businesses where there really is a compelling case to be made for their growth over the next 3 to 5 years. And that's really why we wanted to talk about them today. You know, we don't want to talk about stocks that we don't think have durable growth stories. I think these are businesses with a lot of room still left to run. That's about all for today's video. So, um, if you liked any of these stocks, uh, let us know in the comments. What companies are you watching? What stocks would you like for us to talk about next? Let us know. [music] Like, subscribe, and we will see you in the next video.