36 Stocks on My Watchlist: These 11 Are A Screaming Buy

Right now, I'm looking at my watch list and there are 65 stocks on there right now. And the prices on some of these are getting really, really close. The kind of prices that in the future people may look back and say, "How did nobody see that?" So, let me walk you through them and share the ones that I need to wait further on and the 23 that look potentially cheap. Now, before I get to the 23 stocks, I want to show you something. There are also 14 other stocks right now that based on my assumptions are selling at or near their intrinsic value. That means if you bought them today, you're looking at around a 9 or 10% return over the next 10 years based on my assumptions. That is market matching over long periods of time. And I got those numbers by plugging in my assumptions into our stock analyzer tool. Now, here's the thing. I'm not buying these at these prices because to me there's no reason to buy an individual stock in order to make market matching returns. I want to buy an individual stock because it's going to beat the market and I do that with a margin of safety. But if these stocks fall any further from here, now you're talking about some unthinkable prices and that's when I get really interested. Guys, I'm going to rattle off these companies and the my middle assumption returns. Tractor Supply 10%, Door Dash 10%, Amazon 10%, Lowe's 10%, Visa 10%, Google 9%, Nvidia 9%, Hershey 9%, Netflix 9%, Chipotle 9%, Otus 9%, UPS 9%, HP 9%. Now, real quick, as a reminder, you're never to buy any stock on my watch list or that I own for any reason. Don't even buy stocks that Warren Buffett owns just cuz he owns it. And for sure, don't buy stocks because you saw some article or someone make a YouTube video about it. That is not what we're trying to do here. And that's not how successful investing works. You need to do your own analysis. Now, obviously, if you see a stock that we like and you want to look further into it, more power to you. I do the same thing. But you need to understand the price you're paying before you ever buy a stock. That's the whole point of what we're teaching here. because later in this video, I'm going to share with you how I make assumptions with our stock analyzer tool and how it helps me determine the right price to pay. Now, let me share with you the 13 stocks with the current price returns from stock analyzer that have the potential for really good upside from here. Sprouts Farmers Market 15% returns. Microsoft 14, Meta 14, Qualcomm 14, Nike 14, T-roll price 13%, Louis Vuitton 13%, Disney 12%, Alta 12%, Pool Corp 12%, Target 11, Airbnb 11, and Paycom 11% [snorts] returns. Now, here's where it gets exciting. The next 10 stocks are based on my assumptions going to get desired returns of 15% irr. That's the number I want to see before I buy anything because that gives me the ample margin of safety for myself, not for you. I'm going to acknowledge, guys, 15% is a high hurdle to hit and I don't recommend it for everybody. But for me, given my situation in life and all my investments, I only want to make individual stock purchases when my returns are absurd. First company, Builder's First Source, 28%, Southwest 27%, Lululemon 23%, Adobe 21%, American Express 21%, Alibaba 20%, Uber 20%, PayPal 19%, ACN 17%, into it 16%. Now guys, this next part is the most important part of the video. I'm going to take one company from this list and show you exactly how I determine the right price to pay for a stock with my proper margin of safety. And real quick, before we analyze a stock, an important reminder, do not take the title and thumbnail literally. We're never here to give a stock tip. We're here to teach you a process that one day you can apply that process to your own investments, sleeping better at night because you know how to value a stock, make good assumption about the future, and understand the price you're paying is different than the value you're getting. Let's dig into Alibaba. But before we jump into buying anything, it's important to talk about both sides of the stock, the bull and bear cases. There's always risks that come along with rewards. So, let me start with the bull cases from analysts for Alibaba and how they might be able to achieve the returns that I'm assuming. First, the AI story here is real. Alibaba has building out their own large language models. They've got a partnership with Apple to be the AI backbone for Apple devices in China and their cloud business is seeing a surge in demand from enterprise that need computing power. That's a massive growth engine. Second, the valuation. The stock is cheap. We're talking a price to book ratio around 1.7, which is well below the 4.5 to7 that you'd see from comparable tech companies. And most major analysts have price targets significantly above where the stock is trading right now. So the market is not giving this company credit for what it's doing. And third, the risk is actually coming down. They just settled with the Department of D justice for $600 million. That was a legal cloud hanging over the stock for years. That is gone now. And when legal and regulatory risk starts to clear up on a stock that's already cheap, that's when things get interesting. Now, here are the bare cases from analysts, and you need to hear these before you even think about buying a single company. First, the legal stuff is not over. There are law firms right now launching investigations into potential classaction lawsuits over Alibaba's AI data practices. You've got the European Union looking at possible fines. And even though the DOJ settlement cleared one problem, the Pentagon blacklisting and US China tensions are still very, very real. That's a lot of uncertainty hanging over the stock. Second, the AI hardware problem. China may only get limited access to Nvidia's advanced chips. That matters because if Alibaba can't get the computing power it needs to scale its AI models, that entire growth story that I just told you about starts to slow down. And on top of that, they're restricting what AI tools their own employees can use internally. That is not a great sign. And third, the money. Alibaba is spending aggressively on cloud and AI infrastructure as we speak. And if that revenue doesn't grow fast enough to justify the spending, your margins get crushed. Goldman Sachs has already dialed back their conviction on the stock. So, the smart money is getting cautious. That's the bare case. Now, let me show you the numbers and what price I think makes sense for me to buy the stock based on my analysis and stock analyzer assumptions. So, here we are on Alibaba. The price is $280 billion. Yes, the share price is just that market cap divided by the number of shares. Enterprise value is 344. That's a lot of debt. That's $64 billion in debt. The difference between market cap and enterprise value. Now, we talked about the capex spend. Their cash flow is down big time. It's negative now. Even with that negative that year, last year, they their 5year average free cash flow is still at 12.75 billion. The good news is their net income still showed 15.65 higher than their 5-year average net income. So, just like the other major tech companies that are spending a lot on capex, we are still looking at net income here because this is probably a short-term problem. Next, their profit margin is starting to eek back up again. And you see the 10-year average of 14%. That's after their 5-year average of 9.6. So, at one point, they were doing pretty close to 20% profit margin, which would allow them to double their profit from here, which would take their PE from 18 down to 9. That's a lot of potential there. Crappy returns on capital. That has been hurt big time because of their net operating income. But their revenue growth is not the dying company that everybody assumes. 5.6% a year for the last three, 7.4 for the last five, 26% for the last 10 years, and guys, practically no acquisitions. So, we're looking at this saying, okay, this is pretty solid. And for a company with 40% gross margin, they're only selling for 1.85 time sales. That's pretty awesome. That's like almost car business type levels for a tech company with 40% margin and probably getting better. All right, here are their eight pillars. Not pretty, not awful. Six, five checks, three X's. Net income's down, free cash flow is down. As we know, returns on capital are low. But here's what I love. When their stock fell hard, they started buying back shares. They didn't buy shares at the peak. They started buying it when the stock was cheap. That is your indication that the company believes their stock is cheap. They're doing it the smart way. Now, let's go see what analysts think about this company. Well, guys, they have profit doubling in the next four years, over doubling from $5 to $1.99. That would be consistent if they get their profit margin back to the back to the pre five years ago numbers, which is pretty awesome. And revenue growth 3% 10% 12% 12% 5 1/2 11 12%. Man, so what is that growth taken from 150 to 312 in the next 7 in the next seven years? That's 10% revenue growth per year. This is where we go to the stock analyzer tool. This is what allows us to put the some of the numbers and the story together to find the right price to pay for the company. So guys, here are the assumptions I made for the next 10 years. And I'm going based off what analysts said here, but I'm going to show you how ridiculous this is. Guys, first off, I did revenue growth. I did 6, 10, and 14%. Okay. Next, I did profit margin 13, 16, and 19. Keep in mind my highest numbers are lower than they did prior to 5 years ago. Then what is the PE and price of free cash flow I would assign to this business 10 years from now? Well guys, the market average over long periods of time is 15 or 16. So I think Alibaba being in the fastest growing one of the fastest growing economies in the world and being the biggest company there deserves a premium. The returns on capital are low, but they could get back higher again, which I'm expecting as they do more AI stuff. So, I put 14, 18, and 22. I don't think I'm being egregious by putting 18 in there. And then finally, my personal return, I'm not putting in here. I'm putting 9% to find my intrinsic value. What is the company worth? But remember, I want to make above average returns on this. So, if you want a higher margin of safety, you got to put your own desired return in here. Now, if you're watching this and thinking, I want to be able to do this myself on my own companies. That's exactly why we built the Everything Money community. You might even be looking at my assumptions about Alibaba and saying, I don't agree with those. That's the point of this. Think about what we just did in this video. We've mentioned 37 stocks and how I filtered them down by intrinsic value. We found 23 that are potentially selling at unthinkable prices. On Alibaba, we analyzed the bull case, the bare case, ran the eight pillars, and we're going to figure out what the bright price to pay is using our stock analyzer tool. That's not luck. That's a process. And that process is available to you right now. And the best news yet, you don't have to be a genius. And in fact, it's better if you're an everyday person because you have the advantage over Wall Street and those Harvard MBAs who are managing money for people. and their goal is to stay as close to the market as possible. Inside our community, you get full access to all of our tools, including the stock analyzer tool, the same tool I'm using right behind me. You can plug in your own assumptions on any stock you want. Run your own numbers, figure out what price makes sense for you, not what makes sense for me or anybody else out there. What makes sense for you. And guys, the best part is you're not doing it alone. You've got thousands of members in there analyzing stocks every day, talking about them, sharing ideas, challenging each other every single day. That's how you get better at this. Now, think about it this way. The cost of getting one stock wrong because you didn't do the analysis, that could cost you thousands of dollars, if not more. The cost of getting one stock right because you did the right analysis, that could change your whole portfolio forever. And you get started for only a dollar a day. So, go to everythingmoney.com, try it out for 7 days for seven bucks. I believe once you get in there and start running your own stocks through the analyzer, you're going to wonder why you didn't do this sooner. The link is in the description below. Go check it out. Now, to show you an Alibaba, I hit the analyze button, guys. Check this out. This is why I'm optimistic. I have a low price of 150, high price of 5.45, middle price of 290. Guys, there's a lot of potential here. And with this ample margin of safety, these are the returns we're talking about here for me and my situation. I think it's ample margin of safety. Now, what can I do from here? Well, guys, the stock's at 116. Let's say I want to buy this company, but a little bit lower price because I'm a little bit greedy about things. I can go sell what's called a cash secured put. What this allows me to do in plain English, when I sell a put on a stock, I'm basically saying, I want to buy the stock, but I want to buy it cheaper than where it's trading at right now. So, I pick a price that I'm happy buying it at. That's called the strike price. And while I wait to see if it gets there, the market pays me money just for making that commitment. So, I'm either going to buy it at a great price at a at a future date, or I get to pocket the money, never get the stock, and just move on. Either way, I win. So guys, the stock's at 116. Let's say I go out to September 18th. It's about two months from now, and I want to buy a stock at a hundred bucks. Somebody's going to pay me a $1.93 per share, which is an annualized return of 13.8% on my cash. So, worst case scenario, I don't get the stock and I make an annualized 13.8%. Or best case scenario for me and what I'm comfortable with is I'm buying at $100 per share less my $1.93. So I get it for like $98.7. But you've got to be comfortable with the fact that in order for me to do that, the stock would been have to be hit below 100 on that September 18th price. All right, guys. I've got a surprise for you. We're going to go back to a stock from that list of 13, the ones that are sitting right above my intrinsic value assumptions, but just below that 15% threshold that I've picked for myself. So guys, the stock I'm looking at is Microsoft. Let's pull it up right now. I'm going to show you why I'm interested in Microsoft. A couple things. Market cap about $3 trillion and their enterprise value about 3.17. So call it $200 billion in debt, which sounds like a high number, but guys, they generated $73 billion in free cash flow last year, $125 billion in net income. So they can easily afford that debt. So I like companies that are going to be around for a while. Another thing I like, look at their profit margin. Last 10 years it was 34% then 36.7 for the last five almost 40% last year. Their profit margin keeps getting higher and higher and they have a high return on capital for the last 5 years of 21.74%. So to me this is a top quality business that I want to own in the future. But here's the best part. Look at the last year to date. It's down 17.5% year to date. The NASDAQ's up over seven or eight%. These semiconductors are up huge. People are ignoring software businesses. And that's what I love about this. Now, let's check out the analyst estimates. Analysts are bullish on Microsoft. $17 a share, growing to $40 in the next seven years. That's over 10% a year in earnings per share. And revenue more than doubling again over the next seven years. So, a lot of big potential here for Microsoft. A company that I like, would love to own. down se down down 17% year-to- date, underperforming the NASDAQ by 25%. It's a great place to start looking for value. So, let's go to the stock analyzer tool and see what I valued it at. My value is about $370 per share. The stock is currently at 400. Well, the great news is I can go to my options chain and pick up a date in the future. Let's call it August 20 28th, about about a month from now. Now, guess what? Look at this. This is the put section. Here's $370 per share. Somebody's going to be willing to pay me $7.70 to get Microsoft at $370 per share. The best part is it's about a 25% return on my money. So, if I don't get the stock, I've essentially made over 2% in the next month on my cash waiting to buy Microsoft because I keep the 770 no matter what happens. Now, if the stock falls below 370, I keep the premium. I got which in that case was $770 but I have to also pay $370 for the stock. So essentially I get the stock for $362.30. Now the emotional hard part is what if the stock is selling for 340 people freak out. So what I tell people is only do this if you would buy the company today at that price because if you bought at that price today if it's selling for 3.40 you lost the 30 bucks anyhow but now you got to keep that premium of $7.70. So, in my position, I'm either going to get a great stock I love for actually a lower price than I want because I keep that premium, or I get that premium, get to keep it, I don't get the stock. Either way, I win. I've made 2% of my cash over the next month, which is over 25% annually per year. And the reason this worked perfectly is it was selling for just below the price I want to buy it for. Alibaba selling below the price I want to buy it for. So, selling a cash secured put can still work, and it still does work. But it already makes sense for me at these prices, I might as well just buy some. But for Microsoft, I'm not ready to pay $400 a share for it. So, if you want to learn more about the strategy, we put together a full options guide on cash secured puts and covered calls. It's the exact strategy I use to buy stocks at cheaper prices, like I just showed you with Microsoft, and generate income in the stocks I already own. It's completely free. Just click the link in the description and download it. Guys, if you made it this far in this video, I assume you think the content was great, but wait until you see what I did next. I handpicked seven stocks that I believe will actually beat the real magnificent 7 over the next 10 years. And honestly, even I've been surprised by the results. So, you're going to want to see who made the list and what's been going on. Click the video on your screen right now. Thank you for your time.