4
https://x.com/i/lists/1669153613199835138?t=R0mCicxs7zfJE_yOAek4gQ&s=09
Investing visuals
The speed at which $NVDA scaled its data center revenue still blows my mind. https://t.co/NrIfNYzCHI
tweet
The Kobeissi Letter
BREAKING: US Trade Representative Greer says tariff exemptions on electronics reflect a move from "reciprocal tariffs" to "national security tariffs."
New tariff categories are now emerging.
tweet
The Kobeissi Letter
We have now gone from:
“No exemptions” on tariffs, to refunds on tariffs going back to April 5th, to exemptions not being “permanent.”
The result?
Markets are incredibly confused ahead of the futures open.
tweet
The Kobeissi Letter
Key Events This Week:
1. Markets React To "Tariff Exclusions" - Monday
2. March Retail Sales data - Wednesday
3. Fed Chair Powell Speaks - Wednesday
4. March Housing Starts data - Thursday
5. Philadelphia Fed Manufacturing Index - Thursday
6. ~10% of S&P 500 Companies Report Earnings
We have another busy week ahead of us.
tweet
The Kobeissi Letter
BREAKING: Commerce Secretary Lutnick on tariff exclusions, "this is not a permanent exemption."
tweet
The Kobeissi Letter
BREAKING: Commerce Secretary Lutnick on the "tariff exemptions" announced this weekend:
"They are exempt from reciprocal tariffs, but they are INCLUDED in the semiconductor tariffs which are coming in a month or two."
So basically, they are not tariff exempt just recategorized?
tweet
𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
tweet
The Kobeissi Letter
BREAKING: Commerce Secretary Lutnick says tariffs on semiconductors and electronics will come in “a month or so.”
tweet
Finding Compounders
RT @gainify_io: VALUATION CHECK of the largest SEMICONDUCTORS post-tariff exemption.
Massive valuation gaps vs. 5-year P/E averages for these names:
🔻 $NVDA: -52%
🔻 $AMD: -51%
🔻 $ASML: -40%
🔻 $TSM: -27%
Room to rerate?👀 https://t.co/87X8DrMaP7
tweet
Dimitry Nakhla | Babylon Capital®
“Investors are elated when stock prices rise and depressed when they fall. This reaction makes no sense...
Prospective purchasers should much prefer sinking prices” — Warren Buffett 🗣️
$NVO was loved at $133 (overvalued)
$NVO is not as loved at $65 (undervalued) https://t.co/H2kwSbmdWi
tweet
Finding Compounders
Understanding Dilution https://t.co/2lM6CwA6uS
tweet
Finding Compounders
Join Buffett’s Wagon https://t.co/c2XHIpErvg
tweet
The Kobeissi Letter
BREAKING: President Trump says semiconductors will be exempt from the higher China tariffs.
The exemption will be retroactive to April 5th.
Duties since April 5th on excluded chips will be reimbursed.
tweet
Finding Compounders
Buffett’s investment parameters https://t.co/Rxbr8CwO1O
tweet
Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $ASML 🧘🏽♂️
•NTM P/E Ratio: 24.88x
•10-Year Mean: 31.10x
•NTM FCF Yield: 2.77%
•10-Year Mean: 3.09%
As you can see, $ASML appears to be trading below fair value
Going forward, investors can receive ~25% MORE in earnings per share & ~10% LESS in FCF per share🧠***
Before we get into valuation, let’s take a look at why $ASML is an excellent business (*Financials in USD*)
BALANCE SHEET✅
•Cash & Short Term Inv: $13.21B
•Long-Term Debt: $3.84B
$ASML has a strong balance sheet & 68x FFO Interest Coverage
RETURN ON CAPITAL✅
•2020: 21.6%
•2021: 43.8%
•2022: 48.0%
•2023: 48.7%
•2024: 38.3%
RETURN ON EQUITY✅
•2020: 26.9%
•2021: 49.0%
•2022: 59.4%
•2023: 70.4%
•2024: 47.4%
$ASML has excellent return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2014: $7.09B
•2024: $29.28B
•CAGR: 15.23%
FREE CASH FLOW*
• $ASML FCF is very sporadic due to heavy capital expenditures & isn’t necessarily the most reliable way to analyze the company’s value
NORMALIZED EPS✅
•2014: $3.15
•2024: $20.03
•CAGR: 20.31%
SHARE BUYBACKS✅
•2018 Shares Outstanding: 426.40M
•LTM Shares Outstanding: 393.60M
By reducing its shares outstanding ~7.7%, $ASML increased its EPS by ~8.3% (assuming 0 growth)
MARGINS✅
•LTM Gross Margins: 51.3%
•LTM Operating Margins: 31.9%
•LTM Net Income Margins: 26.8%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~28% MORE in EPS & 10% LESS in FCF per share
Using Benjamin Graham’s 2G rule of thumb, $ASML has to grow earnings at a 12.44% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be more than the (12.44%) required growth rate:
2025E: $27.20 (24.7% YoY) *FY Dec
2026E: $32.30 (18.7% YoY)
2027E: $38.63 (19.6% YoY)
$ASML has a decent track record of meeting analyst estimates ~2 years out. HOWEVER, let’s be conservative & assume $ASML ends 2027 with $35.00*** in EPS (~9% below current estimates) & see its CAGR potential assuming different multiples:
29x P/E: $1,015💵 … ~17.6% CAGR
28x P/E: $980💵 … ~16.1% CAGR
27x P/E: $945💵 … ~14.6% CAGR
26x P/E: $910💵 … ~13.1% CAGR
25x P/E: $910💵 … ~11.6% CAGR
As you can see, $ASML appears to have attractive return potential EVEN if we assume greater or equal to 25x EPS (below its 10-year mean, current multiple, & justified given its quality, moat & growth rate)
Also, given today’s 24.88x multiple, we wouldn’t be relying on multiple expansion at 25x
Today at $668💵 $ASML appears to be a strong consideration for investment, albeit with extreme volatility
Additionally, we have some margin of safety by relying on a lower multiple & lower growth rate
As I’ve stated before, given its volatility, however, it’s wise to piece into $ASML — this way, you enhance your margin of safety while also positioning yourself to “win-win” if the stock moves up or down in the short-term 💵
#stocks #investing
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚[...]
The Kobeissi Letter
BREAKING: US Trade Representative Greer says President Trump has "no plans yet" to speak with Chinese President Xi.
tweet
The Kobeissi Letter
Bitcoin is selling off on the Lutnick headlines this morning.
This is a great weekend-gauge of risk appetite.
Equity futures will still open higher, but not as high as they would’ve without the Lutnick comments. https://t.co/odgFwvwg4m
We have now gone from:
“No exemptions” on tariffs, to refunds on tariffs going back to April 5th, to exemptions not being “permanent.”
The result?
Markets are incredibly confused ahead of the futures open.
tweet
Finding Compounders
Warren Buffett explains how Berkshire selects their stocks. https://t.co/WpyJMW2rkP
tweet
Quiver Quantitative
AOC: Congress has conditioned itself to believe that it is normal for them to day trade individual stocks. https://t.co/x1wReVt4NY
tweet
The Kobeissi Letter
BREKAING: Commerce Secretary Lutnick says semiconductors and pharmaceuticals require "special attention and the President is on it."
"Semiconductors and pharmaceuticals will have a tariff model in order to encourage them to be built in America," he says.
tweet
The Kobeissi Letter
BREAKING: Commerce Secretary Lutnick says electrotonic products will have "special tariffs" coming soon.
He also says pharmaceutical tariffs are coming in the next month or two.
“This is not a permanent sort of exemption," he says on the exemptions announced this weekend.
tweet
Dimitry Nakhla | Babylon Capital®
A quality valuation analysis on $MELI 🧘🏽♂️
•NTM P/E Ratio: 42.45x
•1-Year Mean: 47.73x
As you can see, $MELI appears to be trading below fair value
Going forward, investors can receive ~12% MORE in earnings per share 🧠***
Before we get into valuation, let’s take a look at why $MELI is a great business
BALANCE SHEET✅
•Cash & Short-Term Inv: $3.70B
•Long-Term Debt: $2.82B
$MELI has a strong balance sheet, an ok BB+ S&P Credit Rating & 48x FFO Interest Coverage
RETURN ON CAPITAL🆗➡️✅
•2019: (4.8%)
•2020: 3.7%
•2021: 8.1%
•2022: 14.7%
•2023: 25.7%
•2024: 23.0%
RETURN ON EQUITY🆗➡️✅
•2019: (14.2%)
•2020: (0.1%)
•2021: 5.2%
•2022: 28.7%
•2023: 40.3%
•2024: 51.5%
$MELI has strong and improved return metrics, highlighting the financial efficiency of the business
REVENUES✅
•2019: $2.30B
•2024: $20.78B
•CAGR: 55.30%
FREE CASH FLOW✅
•2019: $314.29M
•2024: $7.05B
•CAGR: 86.32%
NORMALIZED EPS✅
•2019: ($3.71)
•2024: $37.69
SHARE BUYBACKS❌
•2019 Shares Outstanding: 48.69M
•LTM Shares Outstanding: 50.70M
MARGINS🆗➡️✅
•LTM Gross Margins: 52.7%
•LTM Operating Margins: 12.7%
•LTM Net Income Margins: 9.2%
***NOW TO VALUATION 🧠
As stated above, investors can expect to receive ~12% MORE in EPS
Using Benjamin Graham’s 2G rule of thumb, $MELI has to grow earnings at a 21.23% CAGR over the next several years to justify its valuation
Today, analysts anticipate 2025 - 2027 EPS growth over the next few years to be more than the (21.23%) required growth rate:
2025E: $47.04 (24.8% YoY)
2026E: $65.23 (38.7% YoY)
2027E: $85.38 (30.9% YoY)
$MELI has an ok track record of meeting analyst estimates ~2 years out, but let’s assume $MELI ends 2027 with $85.38 in EPS & see its CAGR potential assuming different multiples
38x P/E: $3244💵 … ~19.5% CAGR
36x P/E: $3073💵 … ~17.2% CAGR
34x P/E: $2902💵 … ~14.7% CAGR
32x P/E: $2732💵 … ~12.2% CAGR
30x P/E: $2561💵 … ~9.6% CAGR
As you can see, $MELI appears to have attractive return potential IF we assume >32 earnings (a multiple well-justified by its growth rate & moat)
$MELI boasts an expansive growth trajectory, fueled by powerful network effects that should drive sustained momentum
Key factors contributing to its promising outlook include 🔑
1. Margin expansion
2. Unparalleled access to Latin America's burgeoning economy
3. Network effects that produce self-reinforcing dynamics ensuring long-term competitiveness, among other things
Those buying $MELI today at $1996💵 are buying a great business for a great price, with a decent margin of safety — these growth rates have to be revised down substantially for $MELI to miss the mark, even if the company grows earnings at 22% CAGR over the next 5 years, shareholders will likely end up with a great result
I consider $MELI a steal closer to $1790💵 (~10% below today’s price) where I can reasonably expect ~11% CAGR while assuming a very conservative 26x end multiple, ensuring a large margin of safety
#stocks #investing
___
𝐃𝐈𝐒𝐂𝐋𝐎𝐒𝐔𝐑𝐄‼️: 𝐓𝐡𝐢𝐬 𝐢𝐬 𝐍𝐎𝐓 𝐈𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐀𝐝𝐯𝐢𝐜𝐞. 𝐁𝐚𝐛𝐲𝐥𝐨𝐧 𝐂𝐚𝐩𝐢𝐭𝐚𝐥® 𝐚𝐧𝐝 𝐢𝐭𝐬 𝐫𝐞𝐩𝐫𝐞𝐬𝐞𝐧𝐭𝐚𝐭𝐢𝐯𝐞𝐬 𝐦𝐚𝐲 𝐡𝐚𝐯𝐞 𝐩𝐨𝐬𝐢𝐭𝐢𝐨𝐧𝐬 𝐢𝐧 𝐭𝐡𝐞 𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐢𝐞𝐬 𝐝𝐢𝐬𝐜𝐮𝐬𝐬𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭.
𝐓𝐡𝐞 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐢𝐬 𝐢𝐧𝐭𝐞𝐧𝐝𝐞𝐝 𝐟𝐨𝐫 𝐢𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐩𝐮𝐫𝐩𝐨𝐬𝐞𝐬 𝐨𝐧𝐥𝐲 𝐚𝐧𝐝 𝐬𝐡𝐨𝐮𝐥𝐝 𝐧𝐨𝐭 𝐛𝐞 𝐜𝐨𝐧𝐬𝐭𝐫𝐮𝐞𝐝 𝐚𝐬 𝐢𝐧𝐯𝐞𝐬𝐭𝐦𝐞𝐧𝐭 𝐚𝐝𝐯𝐢𝐜𝐞 𝐭𝐨 𝐦𝐞𝐞𝐭 𝐭𝐡𝐞 𝐬𝐩𝐞𝐜𝐢𝐟𝐢𝐜 𝐧𝐞𝐞𝐝𝐬 𝐨𝐟 𝐚𝐧𝐲 𝐢𝐧𝐝𝐢𝐯𝐢𝐝𝐮𝐚𝐥 𝐨𝐫 𝐬𝐢𝐭𝐮𝐚𝐭𝐢𝐨𝐧. 𝐏𝐚𝐬𝐭 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐢𝐬 𝐧𝐨 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞 𝐨𝐟 𝐟𝐮𝐭𝐮𝐫𝐞 𝐫𝐞𝐬𝐮𝐥𝐭𝐬.
𝐈𝐧𝐟𝐨𝐫𝐦𝐚[...]
Hidden Value Gems
A nice chart on shareholder dilution from management compensation at tech companies.
$BOX $LYFT $W $TWLO stand out https://t.co/Yiin5bhC0l
tweet
Finding Compounders
Buffett offers investing advice https://t.co/NnDA3NWo8L
tweet
Finding Compounders
Ruane Cunniff’s Success Formula https://t.co/h3N96OwdrJ
tweet
Finding Compounders
Search for value aims to spot bargains https://t.co/FkbE7nVE0r
tweet
The All-In Podcast
Chamath explains four key industries that the US needs to onshore:
1) The AI Supply Chain 🧠
2) Energy ⚡️
3) Critical Minerals and Rare Earths ⛏️
4) Pharma APIs 💊
On E223, @ezraklein asked @chamath what success would look like for Trump's tariff / onshoring agenda:
Chamath:
"There is a major issue that the United States has that's much bigger than China."
"We are not in a position to take care of what we need."
"We depend on folks whose view of the United States can change in real time."
Ezra:
"Give me what indices you are going to look for."
Chamath:
"We need to measure and protect four critical areas."
1) The Entire AI Supply Chain 🧠
"Number one is all of the technology, both the chips, as well as the enabling technology around artificial intelligence."
"It must be a robust, largely American supply chain."
2) Energy ⚡️
"Number two is energy."
"We do not have the capability we need to make the energy we need quickly."
"In many ways, we have critical supply chains that can be shut off by China around photovoltaics."
3) Critical Minerals and Rare Earths ⛏️
"Number three... there are critical material inputs that drive the material science of the future."
"So we have a critical minerals and rare earths and material science input problem."
4) Pharma APIs 💊
"And then the fourth, Ezra, are pharma APIs."
"So that when American citizens get sick, we have the ability to not just make it, but also design it and manufacture it."
tweet
The Kobeissi Letter
RT @KobeissiLetter: We now know Trump's TOP economic priority:
For weeks, President Trump said there would be NO tariff delay, even as stocks erased $12+ TRILLION.
Then, the bond market BROKE and a 90-day tariff pause was implemented 12 hours later.
Keep watching bonds.
(a thread) https://t.co/M3AltQqjee
tweet
𝐭𝐢𝐨𝐧 𝐜𝐨𝐧𝐭𝐚𝐢𝐧𝐞𝐝 𝐢𝐧 𝐭𝐡𝐢𝐬 𝐭𝐰𝐞𝐞𝐭 𝐡𝐚𝐬 𝐛𝐞𝐞𝐧 𝐨𝐛𝐭𝐚𝐢𝐧𝐞𝐝 𝐟𝐫𝐨𝐦 𝐬𝐨𝐮𝐫𝐜𝐞𝐬 𝐛𝐞𝐥𝐢𝐞𝐯𝐞𝐝 𝐭𝐨 𝐛𝐞 𝐫𝐞𝐥𝐢𝐚𝐛𝐥𝐞, 𝐛𝐮𝐭 𝐢𝐬 𝐧𝐨𝐭 𝐠𝐮𝐚𝐫𝐚𝐧𝐭𝐞𝐞𝐝 𝐚𝐬 𝐭𝐨 𝐜𝐨𝐦𝐩𝐥𝐞𝐭𝐞𝐧𝐞𝐬𝐬 𝐨𝐫 𝐚𝐜𝐜𝐮𝐫𝐚𝐜𝐲.
tweet
The Kobeissi Letter
Today's tariff exemptions on smartphones, computers, and chip-makers make it clear:
Large cap technology companies will ultimately come out ahead when this is all said and done.
Small caps and small businesses will come out behind.
Large caps will get larger at small caps' expense.
tweet