3 Stocks I REALLY Want to Buy — But They're Too Expensive

As a full-time investor, there are always stocks on my watchlist, but one reason stocks remain on my watchlist are doing part to valuation being too rich. And I think that's the important distinction for investors. A great company does not equate to a great investment. Price matters, valuation matters, and sometimes the best investment decisions you can make is doing absolutely nothing. Today, I'm going to be showing you three companies sitting very high on my watchlist. These are three businesses where I can make a very compelling argument for where they could be five or 10 years from now. But here's the problem. I don't like the risk-reward opportunity at today's prices. So, rather than chasing them higher, I'm going to be doing something that's incredibly difficult for many investors, waiting. And if these stocks experience the type of correction I believe eventually gives me a much better entry point, and I'm going to be ready. For each company in today's video, I'm going to show you why I want to own it, what I don't like about the stock today, and what could cause the stock to sell off. But most importantly, what would need to happen for me to finally start buying. And the third stock on today's list is quite controversial. But before we begin, all I do is ask for you to smash that like button down below, and comment which stock is at the top of your buy list if it dips. Also, tomorrow, August 12th, I'm going to be hosting a free investing webinar where I'm going to talk about thoughts on the stock market now, my expectations for the rest of the year, and so much more. You can check out that link down in the description below. All right, with that being said, let's jump right into stock number one, which is going to be Robinhood, stock ticker H O O D. And this is probably the company on today's list where I've changed my opinion the most over the years. The old Robinhood was relatively simple. Get younger investors into the platform, allow them to buy and sell crypto, trade stocks and options, generate transaction revenue. That business didn't really interest me nearly as much. But Robinhood today, it's becoming completely different company. Management's Its is to build what they call a financial super app, and they're making real progress. We're talking about stocks, options, crypto, retirement accounts, credit cards, prediction markets, futures, banking products, advisory, Trump accounts for kids, and increasingly international expansion. The strategy is becoming pretty clear. Robinhood doesn't just want part of your brokerage account, they want the entire financial relationship. And the numbers tell us that customers are increasingly buying into that ecosystem. Customer growth has grown from under 2 million members back in 2017 to nearly 30 million members, funded members that is, with 4.8 million gold members as well. So, they essentially have nearly the same amount of gold members today than they had total members back in 2019. And total assets under custody has ballooned higher to nearly 370 billion. In Q2 2026, revenue increased by 32% year-over-year to roughly 1.3 billion dollars. Adjusted EBITDA came in at 741 million with very strong margins of 57% and Robinhood gold members increased to an all-time high of 4.8 million, which we saw a second ago. Some of the key takeaways from the recent quarter was the expansion of their prediction market. Also, agentic trading and of course the launch of their new Trump accounts, which are exclusive to Robinhood and they already have seen it nearly 1.5 billion in contributions from 7 million children. For many software companies, management teams and investors alike like to use the rule of 40, which is a calculation by taking the year-over-year revenue growth and adding in EBITDA growth margins. Some use free cash flow margins, but for Robinhood, they strive to maintain a rule of 80. So, as you can see here, the revenue growth over the past 12 months has been 38.3% with EBITDA margins of 47.9%. Added together, that gives us a total of 86.2, well above the rule of 40 and above the company's own internal goals of a rule of 80. Those are impressive numbers, and more importantly, Robinhood is no longer just growing, it's profitable. That's what makes this business considerably more attractive to me today than it was several years ago. So, why don't I just buy it? Because the market knows all of this. That's the problem. When investors become incredibly excited about a company's future, a lot of that future can get pulled forward, and that goes into the stock price, making it more expensive. And Robinhood has several areas where expectations can change extremely quick. Trading activity, crypto volumes, option activity, the prediction markets, retail investor sentiment can sour. When markets are strong and investors are actively trading, Robinhood can look incredible. But markets don't just move higher forever. And if we go through a period where crypto activity slows, like we've seen over the past 12 months, or retail trading slows, or the broader markets correct, Robinhood growth expectations could come down quickly. And that's when I'm going to get more interested. So, what am I waiting for? I'm not sitting here waiting for Robinhood's business to crash. I'm waiting for valuations to get a bit more intriguing. As you can see on our screen right here, EPS for the next year is expected to grow by 30% with a forward PE of 35 times. I'm looking for a discount, and if we got a PEG ratio of at least one or lower, preferably, meaning a target entry point of around $80 or lower, that's where I'm looking to enter a position of Robinhood. And I don't think it's that crazy of an ask. I look at the underlying company and I see net deposits are growing, gold subscribers still increasing, assets continuing to balloon higher, new products gaining adoption, and profitability continuing to improve. That's exactly the situation where I I want to become aggressive because then I'd potentially be getting the same business at a dramatically better price. So Robinhood is absolutely on my shopping list. I'm simply waiting for Mr. Market to give me a better deal. And in the meantime, I'm going to continue to sell options on the name and generate more and more income inside my options community. And if you want to see all of my option trades, which include Robinhood, consider joining my options edge community where I post all of my option trades, when I enter them and when I exit them. And if you hurry up and sign up today, it is the end of my summer sale, which will get you 20% off. That expires tonight, Tuesday, August 11th at midnight. Check out the pin comment down below. All right, with that being said, let's move on to stock number two, which is going to be CrowdStrike, stock ticker CRWD. Now, let's be clear. This is a stock that I already own in my portfolio, both individually as well as through the BUG ETF, which focuses on cybersecurity. But again, it's one of my favorite businesses that I want to own more of, but I don't currently find it attractive enough from a valuation perspective. And the reason I want to own CrowdStrike, it's pretty simple. Cybersecurity, it's not optional. In fact, it's imperative. As businesses move more operations into the cloud, as employees work across more devices, and especially as AI expands, the attack surface continues getting larger. AI is going to make businesses more productive, but AI is also going to make cybercriminals and cyberattacks more sophisticated. That creates what I believe is one of the strongest secular growth trends in technology, and CrowdStrike has positioned itself directly in the middle of it. The real strength of CrowdStrike isn't one cybersecurity product, it's the Falcon platform. It's similar to how I often talk about NVIDIA building an AI ecosystem. CrowdStrike has built a cybersecurity ecosystem. CrowdStrike can provide endpoint security, identity protection, cloud security, threat intelligence, next-gen SIEM, and increasingly AI-powered cybersecurity capabilities. That creates an extremely powerful business model. Land a customer with one or two products, then expand that relationship over time. And we're seeing that show up in the numbers. Over the past 12 months, shares of CrowdStrike are up 111% and that's after coming under attack during the software sell-off earlier in the year, to which I called it bogus, especially for cyber names. During the time, I started buying up the BUG ETF because I wanted a basket of cyber stocks. I looked across the board and said, "Many of these are undervalued. Instead of buying a bunch of them, how about I just buy a basket?" Crowd has continued to grow its top-line revenue each and every year, generating 5.1 billion in sales over the past 12 months. And here's a look at the company's annual recurring revenue, or ARR, which is 5.5 billion the past 12 months, growing 24% year-over-year. Net new ARR exceeded 1 billion for the full year. From a cash flow perspective, the company generated record operating cash flow of 1.8 billion dollars and free cash flow of 1.5 billion. Those are outstanding numbers. So, once again, I love this company. The question is not whether it's a good company. The question is, what am I willing to pay for it? This is where I become much more cautious. Premium companies deserve premium valuations. I have absolutely no problem paying more for a business that's growing faster, has better margins, and has a stronger competitive advantage. But there's a limit because eventually the higher the valuation becomes, the more perfect the future needs to be. Expectations increase, and that's the danger with stocks like CrowdStrike. You don't necessarily need a bad earnings report for the stock to get crushed. We are seeing it during this earnings season that we're going through right now, where companies are reporting double beats, raising guidance, but it's not enough and the stocks go down. You could get 25% growth instead of the expectation of 30% say. Slightly weaker guidance comes out or slower net new ARR margin pressures, a broad software sell-off in general or simply multiple compression. The company can continue growing while the stock goes nowhere and or falls significantly. That's the valuation risk. So looking here at this chart, we are looking at three different multiples, three different angles you're looking at shares of CrowdStrike. The forward PE, the forward EV to sales and the forward price to free cash flow. All three are sitting at extreme levels, all-time highs for the company. Forward PE at 172, forward price to free cash flow of nearly 120 and a forward EV to sales of 36. Those are just way too much across the board for as good of a company that Crowd is, that's exactly why CrowdStrike is on my crash list. I want to own the company, I want to buy more of it, but I want a larger margin of safety. If we get a sizable pullback in the market or cyber stocks in general or CrowdStrike reports a quarter that Wall Street doesn't like and shares drop 30% or more, I'm immediately going back through the numbers. Did ARR growth break or is it still fine? Did customer retention deteriorate or is it still fine? Did free cash flow deteriorate or is it still growing? Did CrowdStrike lose its competitive advantage? If the answer is no, then this is a stock that now I'm ready to buy. That's when things get interesting. I don't want to buy CrowdStrike because everyone loves it. I want to buy CrowdStrike during the moment when everyone temporarily hates it. All right, with that being said, now let's move to our third stock which is by far the most controversial name on our list today and that stock is one I've never owned and it's Tesla, stock ticker TSLA. Tesla is fascinating because depending on who you talk to, it's either one of the greatest companies in the world or one of the most overvalued stocks and hated stocks in the entire market. I think the reality is it sits somewhere in between. Elon is one of the greatest innovators of his generation. There are parts of Tesla's future that I find incredibly compelling, but there's also a tremendous amount of future success already baked into the valuation. And for someone like me to own this particular stock, the valuation really has to make sense. And that's why I'm waiting. If you're sitting here today and looking at Tesla stock and valuing it solely as an automaker, well, the stock is just extremely difficult to justify that. it you just can't. But that's also not what Tesla bulls are buying. They're buying the possibility of Tesla becoming something much larger. Autonomy, full self-driving, robotaxis, Optimus, energy storage, AI, software, potentially an enormous autonomous transportation network. If even a few of those opportunities reach scale, Tesla could eventually look completely different from the company we know today. And another angle Tesla bulls look at is the potential merger with the likes of SpaceX. So, Elon can get all of these companies under one roof. And that is why I'm interested. I'm not particularly interested in buying another automobile manufacturer. In fact, I don't own any. I'm interested in potentially owning one of the world's largest robotics and autonomous AI platforms. But there's a massive problem. The market already knows that story. And even with the recent pullback in shares, the valuation is still not compelling. Not close. And that's where I struggle. You're paying today for a considerable amount of tomorrow's success. Robotaxi needs a ton of work. Autonomy still a ways away, regardless of what Elon says. And then after that, it needs to scale. Optimus needs to become commercially viable. Energy needs to continue growing. And the core auto business still needs to perform. Could all of that happen? Absolutely. But investing isn't about asking could this company become enormous? It's asking what am I paying today relative to the probability of that future actually happening. Those are completely different questions. So, what could cause this stock to pull back? Tesla has historically been extremely volatile, and I think there are several things that eventually create the entry point I'm looking for. Further delays in FSD, weak vehicle delivers deliveries, margin pressure, slower EV demand, robo-taxi delays, regulatory setbacks, you name it. A broader growth stock market correction, or simply investors deciding they've gotten too far ahead of themselves. And if that happens, Tesla could fall dramatically without necessarily destroying the long-term thesis. That's the opportunity I'm waiting for. So, with that being said, what is my Tesla buying framework? If Tesla experiences another drawdown, I'm not automatically buying it. First, I want to answer three questions. Number one, is the autonomous driving thesis still progressing? Number two, is Tesla's robo-taxi business continuing to scale? And number three, is the valuation finally giving me enough margin for error? Because that's the key. I don't need Tesla to become cheap using traditional automotive metrics. I need the stock price to reach a level where I don't have to assume near perfection when it comes to execution to generate any attractive returns. If I get that, Tesla becomes extremely interesting. Taking a look here at this chart over the past 12 months, we can see shares of Tesla have pretty much gone nowhere, down 2%. And when we look at valuations, these are already extreme. And that's after a recent pullback. And that's still well above the company's 5-year historical average. The company's forward EV-to-EBITDA sits at 73. The forward EV-to-sales is at 11.4. This is a stock that I would be interested in if it were to fall, say, 30% at least, meaning a price of around $250 per share. I need that forward EV-to-sales to be closer to around 7 1/2 or 8 times. That's when I'm going to be looking to buy the stock. But, in the meantime, I'm going to continue to sell puts on it while collecting premium. And again, a reminder, if you want to get into options and join my private community, right now is the best time because it's our end of summer sale. You can get 20%. Check out the pin comment down below. And this brings us to what I think is the most important point of today's video. These are three businesses that I want to own all three of them. And in the case of CrowdStrike, I want to buy more. That's precisely why I'm being patient. Robinhood is building one of the most interesting financial platforms in the market. CrowdStrike owns the strongest cybersecurity platforms in the world. And Tesla has potential enormous optionality across autonomy, robotics, energy, and AI. But, a great company can still be a terrible investment at the wrong price. This is something investors forget during bull markets. When stocks keep moving higher, patience starts feeling like stupidity. You watch other investors making money. You start experiencing FOMO. And eventually, you convince yourself, "Well, I'll just buy it now." That's exactly when discipline matters most. So, here's what I'm doing. I'm putting these three companies on what I call my crash watchlist or just my general watchlist. And when the stock price finally gives me an opportunity, I'll compare those prices against the fundamentals because I don't want these businesses to deteriorate. I want the stock to get cheaper. I want to buy high-quality businesses at great valuations. And that's the setup I'm waiting for. So, those are the three stocks I'm waiting to hopefully get a sizable pullback. Robinhood, CrowdStrike, and Tesla. Now, I want to hear from you. Which of these three stocks would you buy after a major correction? And more importantly, how far would it need to fall before you start buying? Drop your stock and your buy price in the comments below. And don't forget about my end of summer sale that expires tonight. Link in the pin comment. And also, my free investing webinar tomorrow, 12:00 p.m. Pacific. That link is in the description down below. If you enjoyed today's video, smash that like button, subscribe to the channel, and we'll see you in the next one. Take care. >> [music]