Why Is NVIDIA Crashing? 🚨 5 Stocks to Buy Now!

00:22:16
https://www.youtube.com/watch?v=_aJoeMWWqMo

Zusammenfassung

TLDRIn this video, analysts cover the significant downturn in the stock market primarily driven by declines in semiconductor companies like Nvidia, AMD, and Broadcom, largely due to new restrictions from China on specific Nvidia products. Analysts expect this situation to escalate trade tensions between the US and China, causing increased market volatility. Despite the challenges, the video highlights five stocks: Taiwan Semiconductor, Orissa Networks, Salesforce, AMD, and Merck, which analysts consider undervalued and with potential upsides of at least 30%. The discussions emphasize the importance of evaluating institutional buying trends and market conditions to identify investment opportunities.

Mitbringsel

  • πŸ“‰ Significant declines in semiconductor stocks are causing market downturns.
  • πŸ‡¨πŸ‡³ China's tightening regulations on Nvidia affect its market prospects.
  • πŸ’° Several companies show potential for at least 30% upside in their stock values.
  • 🌍 US-China trade tensions are likely to escalate, impacting market stability.
  • πŸ“ˆ Analysts suggest that now might be a good time to find undervalued stocks.

Zeitleiste

  • 00:00:00 - 00:05:00

    The market experiences a significant downturn, primarily driven by the semiconductor sector, with major players like Nvidia, Broadcom, and AMD reporting declines due to new energy efficiency regulations imposed by China. This has potential implications for Nvidia's product competitiveness and profitability, amid rising tensions between the US and China, adding to market volatility and creating a challenging environment for tech companies operating in China.

  • 00:05:00 - 00:10:00

    Despite current market fears, there are opportunities to identify undervalued stocks with considerable upside potential. Consumer confidence has dropped considerably, possibly setting the stage for a market rally. Analysts showcase historical context where similar downturns preceded bullish movements, while institutions have downgraded stock outlooks as concerns grow over economic health. Investors should exercise caution amidst this volatility, as fundamental valuations may still suggest a larger drop in stock prices is possible.

  • 00:10:00 - 00:15:00

    Taiwan Semiconductor Manufacturing Company (TSMC) emerges as a strong buy opportunity as it trades at a significant discount relative to its historical valuation, even though its yield is lower. Analysts highlight its strong growth performance, efficient operations, and positive institutional support, reflecting continued investor confidence. Furthermore, TSMC's fundamentals indicate substantial growth potential moving forward, aligning with value-seeking strategies for investors.

  • 00:15:00 - 00:22:16

    Several companies are discussed, including Arista Networks, Salesforce, Advanced Micro Devices (AMD), and Merck & Co, each showing varying levels of growth, profitability, and institutional interest. All firms, despite challenges, show signs of being undervalued with potential for value appreciation, highlighted by their respective institutional buying trends and forecasts. Investors are advised to consider these opportunities along with their margins of safety and expected returns, emphasizing a careful analysis when adjusting portfolio investments.

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Mind Map

Video-Fragen und Antworten

  • What is causing the current market downturn?

    The downturn is largely due to declines in semiconductor stocks, particularly Nvidia, following new restrictions from China.

  • What impact do the trade tensions have on companies like Nvidia?

    These tensions could lead to lower margins and reduced competitiveness for Nvidia's products in the Chinese market.

  • What are the five undervalued stocks discussed in the video?

    The stocks are Taiwan Semiconductor, Orissa Networks, Salesforce, AMD, and Merck.

  • What is the significance of market volatility?

    Increased volatility can create opportunities to find undervalued companies for investment.

  • What is the rating for Taiwan Semiconductor?

    Taiwan Semiconductor has a strong buy rating across the board.

  • What is the anticipated growth for Salesforce?

    Salesforce's earnings per share (EPS) is expected to outperform the sector at 17%.

  • How are institutional investors reacting to these stocks?

    Institutions are generally bullish on the stocks mentioned, indicating strong buying activity.

  • What is the expected upside for Merck?

    Wall Street projects Merck to have an upside of around 30%.

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Untertitel
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Automatisches BlΓ€ttern:
  • 00:00:00
    we're now getting another significant
  • 00:00:02
    red day in the market where we're seeing
  • 00:00:05
    red quite a lot across the board and one
  • 00:00:07
    of the largest drivers for this is the
  • 00:00:09
    semiconductor space where Nvidia
  • 00:00:12
    broadcom AMD large companies are down
  • 00:00:15
    around 4 to 5% and this has come from
  • 00:00:18
    just this morning where China in fact
  • 00:00:20
    are tightening the screws now what
  • 00:00:22
    they've effectively said Regulators are
  • 00:00:25
    reportedly discouraging the country's
  • 00:00:27
    tech companies from purchasing specific
  • 00:00:29
    Nvidia H20 chips and what they've said
  • 00:00:32
    is that the processors breach their
  • 00:00:34
    energy efficient regulations and why
  • 00:00:36
    this is not a good sign for NVIDIA
  • 00:00:38
    because these chips specifically are
  • 00:00:40
    designed for the Chinese market and
  • 00:00:42
    therefore it could mean a lot of these
  • 00:00:44
    products are now ridden off but also
  • 00:00:46
    very likely that Nvidia will now have to
  • 00:00:48
    start making modifications to meet these
  • 00:00:50
    new standards don't forget changes like
  • 00:00:52
    this are going to cost Nvidia money
  • 00:00:54
    their margins are now going to get lower
  • 00:00:57
    at least in relation to these specific
  • 00:00:58
    chips and on on top of that also their
  • 00:01:01
    performance may not be as strong as it
  • 00:01:03
    previously was against some of their
  • 00:01:04
    competitors making them less competitive
  • 00:01:07
    we could start to see some of their
  • 00:01:08
    sales Dro but you could also point this
  • 00:01:10
    to more tensions globally especially
  • 00:01:13
    between the US and China where the US
  • 00:01:15
    have now added more than a dozen of
  • 00:01:17
    Chinese companies to a trade Blacklist
  • 00:01:20
    where they've called this a concern for
  • 00:01:21
    National Security and this is ultimately
  • 00:01:24
    going to escalate where it ends no one
  • 00:01:26
    knows but trade tensions which just last
  • 00:01:28
    week seem to be quite down could now be
  • 00:01:31
    reinig and we could start to see that
  • 00:01:33
    volatility brought back into the market
  • 00:01:35
    and the tensions between both China and
  • 00:01:38
    America are obviously going to be a
  • 00:01:40
    difficult operating environment for
  • 00:01:41
    NVIDIA and historically the Chinese
  • 00:01:43
    market has been one which is fairly
  • 00:01:45
    significant so as we've highlighted this
  • 00:01:47
    is the main driver why we're seeing
  • 00:01:49
    Nvidia down nearly 6% today and still
  • 00:01:52
    when we zoom out and look at just the
  • 00:01:54
    last 30 days the market is still in a
  • 00:01:56
    downtrend in fact Nvidia itself down 10%
  • 00:02:00
    and still companies looking fairly
  • 00:02:02
    overvalued even with the drop we have
  • 00:02:04
    noted now this has made it interesting
  • 00:02:06
    because today we want to look at
  • 00:02:08
    companies that we see a lot of value in
  • 00:02:10
    and each one we're covering today has at
  • 00:02:12
    least 30% upside and we do believe them
  • 00:02:15
    to be good considerations for the
  • 00:02:17
    portfolio overall but we do want to
  • 00:02:19
    point out the market whilst they have
  • 00:02:21
    come out of the extreme feier stage we
  • 00:02:23
    are now interfere and these tensions
  • 00:02:25
    between the US and China is only going
  • 00:02:27
    to escalate things further and further
  • 00:02:29
    so it might not even be that long until
  • 00:02:31
    we find ourselves back in extreme fear
  • 00:02:33
    but we do typically believe this is a
  • 00:02:35
    great opportunity to find companies in
  • 00:02:37
    the market that could provide a lot of
  • 00:02:40
    value we also notice when looking at
  • 00:02:42
    consumer confidence right across the
  • 00:02:44
    board we have now seen the largest
  • 00:02:46
    decline in quite some time in fact since
  • 00:02:48
    2015 and typically this is preceded by a
  • 00:02:51
    very large very bullish movement in the
  • 00:02:53
    overall markets one that Tom Lee just
  • 00:02:56
    yesterday said he believes we are soon
  • 00:02:58
    going to have a face riper rally now
  • 00:03:00
    whether you believe that or not it is
  • 00:03:02
    just something we'd like to consider
  • 00:03:03
    given the fact many people love Tom Lee
  • 00:03:06
    as an analyst but he has been typically
  • 00:03:08
    very bullish and it's hard to say how
  • 00:03:10
    these external factors will continue and
  • 00:03:12
    the impact that they will have overall
  • 00:03:14
    we also still notice the SNP is trading
  • 00:03:17
    fairly high in terms of the figures
  • 00:03:19
    right now around 29 if we just compare
  • 00:03:22
    that over the last 50 to 100 years the
  • 00:03:25
    mean and median sit around the 15 to 60
  • 00:03:28
    Mark so yes we are seeing a drop in the
  • 00:03:30
    S&P we have seen this at least over the
  • 00:03:33
    last month where we got a 10% correction
  • 00:03:35
    but historically valuations have been a
  • 00:03:37
    lot lower does it mean share prices can
  • 00:03:39
    come down another 10 20% yes but at the
  • 00:03:42
    same time it is very difficult to
  • 00:03:44
    predict but these tensions are only
  • 00:03:46
    making things a lot more volatile a lot
  • 00:03:48
    more uneasiness for investors across the
  • 00:03:50
    board and just at the beginning of this
  • 00:03:52
    month HSBC upgraded European stocks and
  • 00:03:55
    actually downgraded us they do believe
  • 00:03:58
    that Donald Trump has taken away a lot
  • 00:04:00
    of optimism across the markets
  • 00:04:02
    specifically in the United States and
  • 00:04:04
    just today they've in fact cut their
  • 00:04:06
    outlook for stocks overall at least in
  • 00:04:08
    2025 where they now say there is risk of
  • 00:04:11
    a potential recession and weak economic
  • 00:04:13
    data isn't really what analysts want to
  • 00:04:16
    note and they're not the only ones in
  • 00:04:18
    fact earlier in the month City Bank also
  • 00:04:20
    downgraded this in terms of US stocks
  • 00:04:23
    and where they believe the growth will
  • 00:04:24
    be in fact HSBC downgraded their rating
  • 00:04:27
    it was overweight they've now put the
  • 00:04:29
    this into the neutral category and when
  • 00:04:31
    we look at City Bank they in fact cut it
  • 00:04:33
    to neutral right at the beginning of
  • 00:04:35
    this month and it may not be too long
  • 00:04:36
    before we see a lot of analysts follow
  • 00:04:38
    Su and we also noticed today in fact
  • 00:04:40
    Barkley's as well as Goldman Sachs and
  • 00:04:43
    RBC have lowered their S&P 2025 Target
  • 00:04:46
    they do mention a lot of uncertainty
  • 00:04:49
    around tariffs but there is just
  • 00:04:50
    uncertainty now across the wide economy
  • 00:04:53
    and we can see they now see this as
  • 00:04:55
    5,900 points as opposed to the 6,600
  • 00:04:59
    that is quite a substantial drop that is
  • 00:05:01
    in fact more than a 10% decrease having
  • 00:05:04
    said all of that we believe there is a
  • 00:05:06
    lot of opportunity and now is a good
  • 00:05:08
    time to consider to bolster the
  • 00:05:10
    portfolio we're going to run through
  • 00:05:11
    five stocks number one Taiwan
  • 00:05:13
    semiconductors down around 5% on the day
  • 00:05:17
    down 133% year to date now very
  • 00:05:19
    interesting because it is one of the
  • 00:05:21
    extreme rares that we cover on this
  • 00:05:23
    channel that has a strong buy across the
  • 00:05:25
    board that is from SEI Alpha Wall Street
  • 00:05:27
    as well as Quant and trades in the mid
  • 00:05:29
    to low end of the 52e range a yield
  • 00:05:32
    around 1.4% a forward P that sits below
  • 00:05:35
    20 and if you've been a shareholder over
  • 00:05:38
    the last 10 years well you would have
  • 00:05:39
    massively out formed the S&P up
  • 00:05:43
    627 per. we also noticed the forward
  • 00:05:45
    valuation of 18.9 is below the 5year of
  • 00:05:49
    22.1 that is what we would typically
  • 00:05:51
    call a severe undervaluation signal
  • 00:05:54
    however the yield at 1.59 is below what
  • 00:05:57
    they've offered over the last 5 years at
  • 00:05:59
    1 81 so a bit of a contradiction in
  • 00:06:01
    terms of the overvaluation possibility
  • 00:06:04
    but as always we don't look at any one
  • 00:06:06
    of these models in isolation then we
  • 00:06:08
    move on to this other valuation although
  • 00:06:09
    bear in mind we're running it through
  • 00:06:11
    our own process we can see the blue
  • 00:06:13
    tunnel expected fair price of TSM great
  • 00:06:15
    to see this increase over time
  • 00:06:17
    ultimately what we want to know but
  • 00:06:19
    right now it's sitting even lower than
  • 00:06:21
    the bottom end again another possible
  • 00:06:24
    severe undervaluation signal and whil
  • 00:06:26
    they get a d on the valuation grade it
  • 00:06:28
    does actually now trade lower than the
  • 00:06:30
    sector so you are getting a 10% discount
  • 00:06:32
    but as we have just highlighted also
  • 00:06:34
    around a 12% discount to their 5year
  • 00:06:37
    average which is a good sign definitely
  • 00:06:39
    one to consider adding in the portfolio
  • 00:06:41
    and if you do look at the vast majority
  • 00:06:43
    of valuation metrics tsmc now trading at
  • 00:06:46
    both a discount to both sector as well
  • 00:06:49
    as their own historical figures and just
  • 00:06:51
    in the latest quarter they grew their
  • 00:06:53
    revenue 37% on a year-on-year comparison
  • 00:06:56
    we're seeing efficiencies to gross
  • 00:06:58
    margin 6% points operating profit up
  • 00:07:01
    seven and their bottom line up five
  • 00:07:03
    definitely criteria here of a high
  • 00:07:05
    quality company and on top of that when
  • 00:07:07
    we look at the expectation for the next
  • 00:07:09
    four quarters they're expecting each one
  • 00:07:11
    of them to be strong double digit growth
  • 00:07:14
    with a 100% historical track record four
  • 00:07:16
    out of four historical beat their growth
  • 00:07:19
    also promising at an A minus
  • 00:07:21
    year-on-year Revenue 34% forward looking
  • 00:07:23
    25 well above the sector median in the
  • 00:07:26
    mid single digit also above their own
  • 00:07:28
    5year at 20 and 177% respectively whilst
  • 00:07:32
    also anticipating EPS growth of 32% over
  • 00:07:35
    the next 3 to 5 years well above the
  • 00:07:38
    sector comparison of 14 and also above
  • 00:07:40
    their own 5e so not only are they
  • 00:07:42
    trading at a discount to what they've
  • 00:07:43
    been valued at over the last 5 years but
  • 00:07:45
    they're growing both their revenue and
  • 00:07:47
    their earnings per share at a much
  • 00:07:49
    faster rate definitely something to take
  • 00:07:51
    note of and profitability equally is
  • 00:07:53
    impressive add an A+ 56% gross margin
  • 00:07:56
    well above the sector of 51 above their
  • 00:07:58
    own 5year at 54 bottom line 41% well
  • 00:08:02
    above the sector at four and also above
  • 00:08:04
    their own 5year showing us efficiencies
  • 00:08:06
    to both gross and bottom line net income
  • 00:08:09
    was also generating more cash from
  • 00:08:11
    operations at 56 billion than what they
  • 00:08:13
    have done historically at 39.6 and well
  • 00:08:16
    above the sector comparative at 109
  • 00:08:19
    million we also want to flag
  • 00:08:20
    institutions with their 177% ownership
  • 00:08:23
    whilst they've sold 16 A5 billion shares
  • 00:08:25
    over the last year they have bought
  • 00:08:27
    nearly 50% as much at 20 .3 billion was
  • 00:08:30
    also buying more in Q4 most recent
  • 00:08:33
    period in fact so we are able to note
  • 00:08:35
    institutions bullish on Taiwan
  • 00:08:37
    semiconductors now as we said Each one
  • 00:08:39
    we're going to give you our own
  • 00:08:40
    valuation for TSM we get to
  • 00:08:43
    $236 the average of these three models
  • 00:08:45
    that you can see on screen as we are
  • 00:08:47
    going through a few stocks today we
  • 00:08:48
    won't go through the inputs and outputs
  • 00:08:50
    but effectively the average of these
  • 00:08:51
    three models and we're not done there
  • 00:08:53
    because we always like to apply an MOS
  • 00:08:56
    10% to kick things off execute by that
  • 00:08:59
    if it me are three golden criteria wide
  • 00:09:01
    Mo strong financial metrics and good
  • 00:09:04
    forward-looking data if you believe that
  • 00:09:06
    today a buy
  • 00:09:07
    $12 and then we keep going till it's
  • 00:09:09
    near the current trading price and what
  • 00:09:11
    we're effectively saying not a 30% MOS
  • 00:09:14
    just yet but you are getting at least 25
  • 00:09:17
    up to
  • 00:09:18
    $177 somewhere in fact between 25 to 30
  • 00:09:21
    with Wall Street themselves very bullish
  • 00:09:23
    we got an incredibly rare triple strong
  • 00:09:26
    buy rating where they see 245 over the
  • 00:09:28
    next year translating to 42% upside and
  • 00:09:31
    as always give us your thoughts below do
  • 00:09:33
    you see this as a buy hold or sell now
  • 00:09:36
    before we move into the next one just to
  • 00:09:38
    let you know we have released our latest
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    3- weekly article we drop one every
  • 00:09:42
    single Monday morning where we cover
  • 00:09:44
    severely undervalued stocks as well as
  • 00:09:46
    what's going in the market over the last
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    few days so click below you can sign up
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    read straight away where you'll also be
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    able to gain access to severely
  • 00:09:54
    undervalued stocks for the month of
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    March lots of information for each one
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    the upside That Wall Street themselves
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    see over the next year and on top of
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    that you can grab a recently released
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    copy of 97 stocks that Wall Street
  • 00:10:07
    themselves believe have the most upside
  • 00:10:09
    in the SNP right now so click below you
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    can sign up and read straight away and
  • 00:10:14
    for those that are subscribed on Monday
  • 00:10:16
    we are releasing for free a spreadsheet
  • 00:10:19
    covering all the dividend Kings lots of
  • 00:10:21
    information for each one as well as what
  • 00:10:23
    we believe the intrinsic price to be so
  • 00:10:25
    don't forget to click below we then
  • 00:10:27
    moving on to orisa networks which is is
  • 00:10:29
    down around 7% today in fact a triple
  • 00:10:32
    buy rating across the board trading near
  • 00:10:34
    its 52 we low and it doesn't pay a
  • 00:10:36
    dividend as of now but over the last
  • 00:10:39
    year up 9% over the last 10 years
  • 00:10:41
    massive outperformance of the S&P up
  • 00:10:45
    1,867 and it does get a d Plus on the
  • 00:10:48
    valuation grading as in fact this sector
  • 00:10:50
    does sit a lot low at 22 so you are
  • 00:10:53
    paying a 58% premium something that we
  • 00:10:55
    know regardless of what valuation metric
  • 00:10:58
    you look at today and in comparison to
  • 00:11:00
    where they have been over the last 5
  • 00:11:02
    years they pretty much sit right around
  • 00:11:04
    that level we do also note green right
  • 00:11:06
    across the board something we always
  • 00:11:07
    love to see and growth while they get a
  • 00:11:09
    c minus year on-ear up 20% forward
  • 00:11:12
    looking 19% well above the sector in the
  • 00:11:15
    mid single digit not far off their own
  • 00:11:18
    5ye at 23 and 19% respectively with EPS
  • 00:11:22
    anticipated to grow at 19% that's above
  • 00:11:24
    the sector at 14 and marginally higher
  • 00:11:27
    than their own 5year at 17 point too
  • 00:11:29
    their profitability also comes in at an
  • 00:11:31
    A+ with gross margin 64% above the
  • 00:11:34
    sector at 51 above their own 5year of 63
  • 00:11:38
    and we can see bottom line 41% above the
  • 00:11:41
    sector at 4 and also above their own
  • 00:11:43
    5year of 32 so efficiencies are noted
  • 00:11:45
    for orisa networks with cash from
  • 00:11:47
    operations very significant at 3.71
  • 00:11:50
    billion given we see Over The Last 5
  • 00:11:52
    Years a lot lower at 1.3 billion and the
  • 00:11:55
    sector nowhere near at 109 we also know
  • 00:11:59
    note in their most recent quarter
  • 00:12:00
    Revenue was up 25% year on-ear with very
  • 00:12:03
    minimal movement across all three
  • 00:12:05
    margins in terms of Institutions 83%
  • 00:12:07
    ownership 1 billion worth of sales but
  • 00:12:10
    51 billion Buys in comparison that is a
  • 00:12:13
    lot of buying in fact the vast majority
  • 00:12:15
    if not all of it was just in the most
  • 00:12:17
    recent quarter so not only are
  • 00:12:19
    institutions very bullish but with a
  • 00:12:21
    massive Buy in Q4 we can in fact note
  • 00:12:24
    they are fairly bullish at this point in
  • 00:12:26
    time now intrinsic value today gets to
  • 00:12:28
    100 $160 and if we do use the MOs
  • 00:12:31
    probably quite obvious to see you are
  • 00:12:33
    getting a large margin of safety in fact
  • 00:12:36
    you're getting at least 40% up to $96
  • 00:12:39
    and at 50% not quite there yet not far
  • 00:12:41
    off so 50% MOS for anet with upside of
  • 00:12:45
    52% Wall Street see this at
  • 00:12:48
    $125 over the next year and do give us
  • 00:12:50
    your thoughts below we then move on to
  • 00:12:52
    Salesforce which is down around 3% today
  • 00:12:55
    down 8% over the last year over the last
  • 00:12:57
    10 years massive outperformance up 321
  • 00:13:01
    trading in the mid to lower end of the
  • 00:13:02
    52e range a double buy from SEI alfha
  • 00:13:05
    and Wall Street a fairly trivial yield
  • 00:13:07
    at 0.55% and a forward valuation around
  • 00:13:10
    the 25 to 26 region now this is
  • 00:13:13
    significantly lower than their 5ye at
  • 00:13:15
    32.3 that is what we would say a massive
  • 00:13:18
    severe undervaluation signal and that's
  • 00:13:20
    also reconfirmed when we look at this
  • 00:13:22
    model there is disparity between where
  • 00:13:24
    the company sits and the lower end but
  • 00:13:26
    it does right now trade at a premium to
  • 00:13:28
    the sector in fact you're paying 177%
  • 00:13:30
    more however as we just showed you it's
  • 00:13:32
    trading around 39% of a discount to The
  • 00:13:35
    Last 5 Years and if we also look at
  • 00:13:37
    other valuation metrics again conclusion
  • 00:13:40
    is the exact same now in the most recent
  • 00:13:42
    earnings Revenue was up 8% with some
  • 00:13:44
    small efficiencies noted to all three
  • 00:13:46
    margins and they also anticipate growth
  • 00:13:48
    to the next four quarters with a 75%
  • 00:13:50
    historical track record just one miss in
  • 00:13:52
    quarter3 and growth is coming in at a c
  • 00:13:55
    minus now what we notice here is pretty
  • 00:13:57
    much 9% year on-ear and forward looking
  • 00:13:59
    which is slightly above the sector at 5
  • 00:14:01
    and 7% but a lot lower from what we've
  • 00:14:03
    seen in the past at 20 and 17%
  • 00:14:06
    respectively however EPS is expected to
  • 00:14:09
    outperform the sector 17 versus 14 but
  • 00:14:12
    again slightly lower than their own
  • 00:14:14
    5year at 20.2 profitability looking good
  • 00:14:17
    at an A+ gross margin 77% above the
  • 00:14:20
    sector at 51 above their own 5year at 75
  • 00:14:23
    bottom line very strong 16% well above
  • 00:14:26
    the sector of four quite a significant
  • 00:14:28
    jump than their own 5ye of 8.91 so quite
  • 00:14:31
    a significant amount of efficiencies
  • 00:14:33
    whilst also generating a lot more cash
  • 00:14:36
    13 billion when over the last 5 years
  • 00:14:38
    this sat at 7.4 and also well above the
  • 00:14:40
    sector at 109 million we also note 81%
  • 00:14:44
    institutional ownership with 23 billion
  • 00:14:46
    worth of sales lot more buying at 31
  • 00:14:49
    billion the same to be said in the most
  • 00:14:50
    recent quarter institutions clearly
  • 00:14:52
    bullish on Salesforce now intrinsic
  • 00:14:54
    value gets to
  • 00:14:56
    $371 derived from the DCF just one model
  • 00:14:59
    so we can quickly show you but growth
  • 00:15:01
    rate of 12% bear in mind their most
  • 00:15:03
    recent annual accounts showed growth of
  • 00:15:05
    the free cash flow of 50% on average 31%
  • 00:15:08
    over the last 10 years and you can in
  • 00:15:10
    fact see we have a low medium and high
  • 00:15:12
    moving forwards 10 12 14 remember
  • 00:15:15
    numbers are subjective you can grab a
  • 00:15:17
    copy of this model by clicking on the
  • 00:15:19
    pin comment below running through your
  • 00:15:21
    own numbers whether it's for Salesforce
  • 00:15:22
    or any others but 12% and the discount
  • 00:15:25
    rate we get the present value of future
  • 00:15:26
    free cash flows and terminal value add
  • 00:15:28
    to together with the cash subtract total
  • 00:15:30
    debt get to the equity value divide by
  • 00:15:32
    the shares outstanding and as we can see
  • 00:15:34
    371 indicating 32% upside full
  • 00:15:38
    transparency will show you at 10% 322
  • 00:15:41
    15% upside and at 14% 427 52% as typical
  • 00:15:46
    on the channel we do take the medium
  • 00:15:48
    rate of 12% where we apply the MOs at
  • 00:15:51
    10% a buy at 334 at 20% around 297 and
  • 00:15:55
    at 30% at today's Point $260
  • 00:15:59
    not quite there yet so you could argue a
  • 00:16:01
    25% MOS for Salesforce today with Wall
  • 00:16:04
    Street seeing this at 380 35% upside but
  • 00:16:07
    we can also show you for those that want
  • 00:16:09
    to be a bit more conservative at the 10%
  • 00:16:11
    what the MOS would be and we can see at
  • 00:16:13
    10% a Buy 290 at 15% not quite there yet
  • 00:16:17
    so even on the lower end of the model
  • 00:16:19
    you are still getting a 10% margin of
  • 00:16:21
    safety with wall Street's price Target
  • 00:16:23
    untouched $380 35% upside we then move
  • 00:16:27
    on to the semiconductor giant advanced
  • 00:16:29
    Micro Devices down 5% on the day down
  • 00:16:31
    39% over the last year but over the last
  • 00:16:34
    10 years massive outperformance of the
  • 00:16:36
    S&P up nearly 4,000% trading near the 52
  • 00:16:39
    we low a double buy from seeki alpha as
  • 00:16:42
    well as Wall Street and they're trading
  • 00:16:43
    at a valuation near the 25 Mark which as
  • 00:16:45
    we can see is a little bit high in the
  • 00:16:47
    sector so you are paying a slight 11%
  • 00:16:49
    premium but given their 5year average
  • 00:16:51
    forward valuation is 41.5 that is right
  • 00:16:54
    now trading at a massive 41% discount
  • 00:16:57
    and no matter what valuation met trick
  • 00:16:59
    you look at AMD is trading significantly
  • 00:17:01
    lower than what it has done historically
  • 00:17:03
    in their most recent earning Revenue was
  • 00:17:05
    up 24% year- on-ear largest driver and
  • 00:17:08
    in fact their largest income stream data
  • 00:17:10
    center did Propel that up 69% year onye
  • 00:17:13
    with efficiencies to the gross and
  • 00:17:15
    operating margin although the bottom
  • 00:17:17
    line did suffer slightly down 5
  • 00:17:19
    percentage points they do however
  • 00:17:21
    anticipate double digit growth to the
  • 00:17:23
    next four quarters 100% historical track
  • 00:17:26
    record as well with an A on the growth
  • 00:17:27
    grade Revenue year year 14% forward
  • 00:17:30
    looking 19% well above the sector in the
  • 00:17:33
    mid single digit but it is quite some
  • 00:17:35
    way below the 5e average at 34 and 26 so
  • 00:17:38
    you could probably justify why it was
  • 00:17:40
    trading at a higher forward valuation
  • 00:17:43
    and if we do look at the EPS 29%
  • 00:17:45
    expected over the next 3 to 5 that is
  • 00:17:47
    above the sector of 14 but lower than
  • 00:17:49
    their own 5year of 33% if we then move
  • 00:17:52
    on to the profitability they do get an A
  • 00:17:54
    minus gross margin 53% above the sector
  • 00:17:58
    at 51 it is also above their own 5year
  • 00:18:00
    at 49 bottom line 6% again above the
  • 00:18:03
    sector at four but lower than their
  • 00:18:05
    5year of 11 with cash generated from
  • 00:18:07
    operations at least increasing at 3
  • 00:18:09
    billion above their 5year of 2.33 and
  • 00:18:12
    well above the sector at 109 million if
  • 00:18:15
    we look at the institutions they hold
  • 00:18:17
    71% ownership 19.8 billion worth of
  • 00:18:20
    sales pretty much a similar amount of
  • 00:18:22
    buying but we do notice in the most
  • 00:18:24
    recent quarter they actually were
  • 00:18:25
    selling more than they were in fact
  • 00:18:27
    buying so you could probably say they
  • 00:18:29
    were a bit more bearish than they were
  • 00:18:31
    bullish now intrinsic value comes to
  • 00:18:33
    $137 you can see we've used a 20 25 and
  • 00:18:36
    30% growth rate however for this
  • 00:18:38
    specific one we've gone 25% and you will
  • 00:18:41
    get a margin of safety at 10% bu 123 at
  • 00:18:44
    20% pretty much where we see this
  • 00:18:46
    company now 20% MOS Wall Street
  • 00:18:49
    themselves 35% upside price Target
  • 00:18:52
    $148 and if we do take a look at for
  • 00:18:55
    those who believe maybe 20% should be
  • 00:18:57
    the most appropriate rate you you can in
  • 00:18:59
    fact see you are talking about downside
  • 00:19:01
    now of 11% so in conclusion for AMD 20%
  • 00:19:04
    MOS 35% upside we then move on to Merk
  • 00:19:07
    and Co which is down 30% over the last
  • 00:19:10
    year over the last 10 years up 55%
  • 00:19:13
    trading nearest 52 week low double buy
  • 00:19:15
    again from SEI Alpha and Wall Street a
  • 00:19:17
    yield probably the highest we have seen
  • 00:19:19
    today at 3.7% and probably also the
  • 00:19:22
    lowest forward valuation sitting just
  • 00:19:24
    below 10 and that is significantly lower
  • 00:19:26
    than their 5year average so a severe
  • 00:19:28
    under valuation signal and again the
  • 00:19:30
    yield on offer of 3.65 well above the
  • 00:19:33
    5year three so a double severe
  • 00:19:35
    undervaluation which is also confirmed
  • 00:19:37
    when we do take a look at this model as
  • 00:19:39
    there is disparity between the lower end
  • 00:19:41
    so all three signals indicating
  • 00:19:42
    undervaluation we also noticed that most
  • 00:19:44
    recent quarter saw Revenue growth of 7%
  • 00:19:47
    with some nice efficiencies to the gross
  • 00:19:49
    profit and large efficiencies to both
  • 00:19:51
    pre-tax profit and their bottom line net
  • 00:19:53
    income now they're grading with a B we
  • 00:19:55
    can in fact note sector trading a lot
  • 00:19:57
    higher at 17 you are getting a 43%
  • 00:19:59
    discount but you're also getting a 46%
  • 00:20:02
    discount to their own 5year as we do
  • 00:20:04
    always say some companies deserve a
  • 00:20:05
    discount as well our question is to find
  • 00:20:07
    out does it deserve the discount and
  • 00:20:09
    should we be avoiding or is it looking
  • 00:20:11
    like a good value play and one thing you
  • 00:20:13
    will notice across the vast majority of
  • 00:20:15
    metrics it's trading at a discount to
  • 00:20:18
    both sector and their own 5year in terms
  • 00:20:21
    of earnings expectations three of the
  • 00:20:22
    next four to be growth with a 100%
  • 00:20:25
    historical track record and a on the
  • 00:20:26
    growth grade are the revenue year-
  • 00:20:28
    on-year 7% pretty much in line with the
  • 00:20:30
    sector but lower than their 5 year of
  • 00:20:32
    11% forward looking 5% lower than both
  • 00:20:35
    sector at 7 and their 5 year of six with
  • 00:20:37
    EPS anticipated to only grow at around 7
  • 00:20:40
    a half% lower again than sector at 10.8
  • 00:20:43
    and their own 5e which was a lot higher
  • 00:20:46
    at
  • 00:20:46
    16.9 in terms of profitability add an A+
  • 00:20:50
    gross margin 77 well above the SEC at 60
  • 00:20:53
    above their own 5ye at 73 so efficiency
  • 00:20:55
    is noted and the same to be said on the
  • 00:20:57
    bottom line 27% sector-4 so they're
  • 00:21:01
    losing money but also above their own
  • 00:21:03
    5year at 17.8 cash from operations has
  • 00:21:07
    also been increasing very rapidly at 215
  • 00:21:09
    billion given their 5e sits at 15
  • 00:21:11
    billion and the sector burning through
  • 00:21:13
    cash -113 mil institutions currently
  • 00:21:16
    hold around 76% ownership 15 billion
  • 00:21:19
    worth of sales a lot more buying at 25
  • 00:21:21
    billion more buying again in the most
  • 00:21:23
    recent quarter Merk and Co is one
  • 00:21:25
    institutions do love very bullish on and
  • 00:21:28
    our value Val ation today comes to $130
  • 00:21:31
    and again don't forget you can always
  • 00:21:32
    grab a copy of this model by clicking on
  • 00:21:34
    the pin comment below running through
  • 00:21:35
    your own numbers whether it's Merk and
  • 00:21:37
    Co or any others but in terms of the
  • 00:21:39
    margin of safety at 10% buy at 117 at 20
  • 00:21:43
    104 at 30 at $91 this is where we see
  • 00:21:46
    Merk and Co 30% MOS fairly attractive
  • 00:21:49
    starting yield at near 3 and a half% and
  • 00:21:52
    Wall Street themselves 116 is where they
  • 00:21:54
    see this over the next year translating
  • 00:21:56
    to 30% upside as always though give us
  • 00:21:58
    your thoughts are these five companies
  • 00:22:00
    you're looking to add maybe you think
  • 00:22:02
    they're a hold or for whatever reason
  • 00:22:03
    they don't fit your overall portfolio
  • 00:22:05
    don't forget as always to sign up to the
  • 00:22:06
    free weekly newsl grab those
  • 00:22:08
    spreadsheets come and join us in the
  • 00:22:09
    patreon where we cover our weekly buys
  • 00:22:11
    and sells and as always have a great day
  • 00:22:13
    we'll see you all on the next one
Tags
  • semiconductor
  • market downturn
  • trade tensions
  • Nvidia
  • AMD
  • investing
  • undervalued stocks
  • portfolio
  • growth
  • US-China relations