$AMAT reported a miss on earnings and revenue due to Covid-related shutdowns in China that delayed $150M of revenue in the quarter. However, management notes that demand remains strong for wafer fab equipment.
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Shared Research Screens:
Value Line Top 100 Highest Growth
I’ve always seen excerpts in books touting Value Line as a valuable source of research analysis, but had never looked at subscribing. They’d always mentioned it was available at local public libraries free of charge. I don’t pay for investment advice like I don’t pay for women, so off to the library I went. I was shocked when the librarian showed me the giant binders of already crunched numbers of everything I’d ever wanted and more!
I said I was going to start sharing research screens weekly, but due to the backlog, I need to spit a few out a little quicker while valuations are still accurate & relatively attractive.
This first list started with a list of Value Line growth companies, 100 of them. I had to narrow the list somewhat, without my bias, so I used their provided statistics to cull the best investable options from the original list of their Top 100 Highest Growth Stocks.
The reason this quality growth screen jumped out at me in the first place was the qualifying criteria, eliminating most of the risk of making a bad decision (based on emotion or hype).
Value Line quote: “To be included, a company’s annual growth of sales, cash flow, earnings, dividends, and book value must together have averaged 10% or more over the past 10 years and be expected to average at least 10% in the coming 3-5 years.”
That says a lot about the stability, strength, & trajectory of a company and that’s the type of near zero risk, sleep well at night (SWAN) stocks I like to own. Especially when they’re undervalued or out of favor, just reported a bad quarter, or trading at historically low valuation multiples for any other myriad reasons.
Statistical categories included in this Value Line table include 1) Timeliness Rank, 1 being best time to buy, 5 being the worst, 2) Safety Rank, 1 being safest, 5 being the riskiest, 3) current P/E ratio, 4) estimated 3-5 year price appreciation, and 5) the company’s industry rank. I’ve chosen to personally eliminate all fortune telling/future predictions/economic forecasts, etc. from my analysis, therefore will exclude forward looking estimates whenever possible. To narrow the list from the top 100 to a more manageable list of the cream of the crop, I chose to look for company’s with a Timeliness & Safety rank of 1-2 to ensure highest quality & fair value/positive outlook, a P/E ratio below 30 to ensure I’m not paying too high a price, and top 10 rank in their industry to hopefully provide additional quality/moat/competitive advantage strength to the final contestants on #INVESTWITHDEEBO. Ensuring quality first, and value second, hasn’t failed me yet.
Turns out, only 2 companies met such high standards, so I had to relax criteria just a tad. Those two companies were Google and Microsoft ($MSFT just barely, with a P/E of 30.xx) Google was the sole company with an absolutely perfect score; 1 on Timeliness & Safety, P/E ~20, ranked #3 in their industry. And had +100% 3-5 year estimated price appreciation to boot.
So, relaxing the standards, I was able to get almost 25 company’s I think provide higher probability of outperformance going forward, although I don’t believe there’s a bad company on the list.
Value Line Top 100 Highest Growth Stocks; additionally screened for my 4 additional quality & valuation hurdles (timeliness, safety, P/E, industry rank) produced the following:
Hitting a perfect 4/4 parameters:
An exceptional 3/4 Parameters:
Still great 2/4 Parameters:
Couple Honorable Mentions that narrowly missed the expanded standards:
The reason I love screens like this is because every one of these 100 companies is a strong company. Starting with a high quality list, then further screening for quality & valuation from there, has drastically reduced the probability of making a bad investment. Unless I get my emotions involved, then I take an L occasionally. So I try to keep it as near 100% mechanical as possible. I understand the voting machine vs the weighing machine; price will always follow performance, may just take a bit for the herd to catch up😉
Sorry again for the forward looking estimates, I’m keeping them at a minimum, promise.
After doing this for hours today, I wanted to score them to give more of an idea on which I thought might provide the most upside. So I spent hours today developing a point system based on the quality & valuation metrics already discussed, plus quality, profitability, valuation metrics & margin of safety estimates from 3 of my most trusted & accurate data sources. The primary reason I wanted to do this, was because to take advantage of the most irrationally priced stocks, doesn’t always require us buying the best companies. So this scoring system gives points ranging from 5-25 per category, for 6 additional categories of quality, value, & MoS. Higher quality rank= more points, larger margin of safety=more points. This scale (admittedly with 100% personal emotion and bias) was intended to reward the companies that 1) hit the most parameters, and 2) had the largest margin of safety, therefore minimizing downside risk to an absolute minimum, while simultaneously increasing the probability of outperformance. So here is the same list, in order of points scored, on my totally made up point scale, to hopefully provide some context as to the level of undervaluation.
The points for all criteria equaled a possible total of 165 points. This would be a dream stock at a dream price. Google is the ONLY company to pass every single criteria every single step of my analysis today. Taiwan Semiconductor only scored slightly higher because the estimates for MoS were much deeper for $TSM than $GOOG. So even though they got 0 points on one indicator, they made up for it with more points for MoS. Google scored points as a top ranked candidate (top 25% of companies at time of comparison) in every single category. I’d have to dig through an entire notebook to count the data points that went into this 10 hour waste of a day, but Google scored perfect at every step. But with MoS estimates of only 6%-16%, this is a classic Buffet, “wonderful company at a fair price”. So here is my totally biased list of quality companies trading at fair or below fair value.
$TSM 125
$GOOG 120
$LAD 120
$NFLX 110
$SWKS 110
$MSFT 100
$ON 95
$LOW 95
$TMO 95
$MA 75
Remember, this is not a quality ranking. This list weights margin of safety equally with other metrics. The companies at the bottom of this list are great, just not as much probability of upside compared to more undervalued/out of favor stocks at the top of the list.
Hope this provides some SWAN stocks for other value, or growth at value, investor’s out there🤙
PS: Craziest part of seeing the results of this list, since it was just made today, is that I have actually opened positions in $TSM, $GOOG, $NFLX, $MSFT, $AVGO, $NVDA, $KLAC, & $LRCX in the last 30 days, based on my own analysis of what’s important. I don’t feel 100% confident just because any specific source agrees; but I feel comfortable trusting my outside data sources as 2nd opinions based on the experience I’ve had using them over the last few years. Never hurts to find more reasons to want to buy, or maybe avoid, a specific company.
This is one impressive post! Really appreciate all the time and effort you put in. Nice to see $GOOG make it to the top list but also there any a few companies that I need to check out since I never seen this tickers and maybe there some hidden gems for myself to explore more on!

Appreciate all the work you put into this
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McKinsey analysis based on a range of macroeconomic assumptions suggests semiconductor industry’s aggregate annual growth could average from 6 to 8 percent a year up to 2030.

$1 trillion dollar industry by the end of the decade, assuming average price increases of about 2 percent a year and a return to balanced supply and demand after current volatility.

Drilling down into individual subsegments, about 70 percent of growth is predicted to be driven by just three industries: automotive, computation and data storage, and wireless.

The long term trends in semis are so strong, I'm happy to ride the downturns out to guarantee that I am not left at the train station. It really is hard to fathom the rate of growth of data centers and demand for cloud compute - if anyone has eyes on the future rates of growth it would be the hyperscalers, and they're almost panic-investing, lol
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Sean's avatar
$89.9m follower assets
Portfolio Earnings Review Pt2
Portfolio Earnings Review Part 2 out now!

Highlighting report numbers vs street expectations, visualizing company KPI trends, and quotes from Q&A portion of earnings call!

Ian Gray's avatar
$25.4m follower assets
I will need to listen to this.

Own a tiny position in $AMAT thanks to its growing dividend, low payout ratio, and having heard it mentioned by The Motley Fool.

I am looking forward to learning more about it here.
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Dylan Patel's avatar
$88.2m follower assets
Intel Is Throwing The Kitchen Sink, But Is The Turn Around
Plan Reasonable?
Deep dive on Tower Semiconductor Fabs/IP
Intel Culture Shift
Future product and roadmap competitiveness by business unit

I mapped out Tower Semiconductors capacity. I also wrote a
lot about their specific differentiated technologies.
In short, Intel acquired ~2 million wafers per year of a lot
of niche technologies and great people to help accelerate their foundry push.

I also wrote a lot about the culture shift at Intel, including a really great story about Intel and how they treated various semicap firms (poorly).
This specific story is Applied Materials, but tons of other horror stories I've heard the supply chain.

Something that shouldn't be underestimated is accountability throughout the organization.
OKRs were invented by Andy Grove, Brian Krzanich removed them, and Pat Gelsinger has brought them back!

I also discussed a lot about Intel's capital allocation strategy, spending plans, and fabs.
There's a particularly interesting potential partnership and MOR signed with Brookfield Asset Management, a real estate, private equity, and alternative investment fund.

Good morning contrarians! Russia-Ukraine continues to hang over the market. Yesterday we had a nice relief rally. Was that it now? Nobody knows, which is why this is still very much front and center in investors’ minds. Earnings are a bit of a distraction but only really for individual stocks.

On that note, Hilton Worldwide ($HLT) just missed on EPS but beat revenues while Owens Corning ($OC) beat both top- and bottom-line estimates and announced a stock buyback to boot. Kraft Heinz ($KHC) and Shopify ($SHOP) are also due to report before the open at 0930. After the close at 1600 we get Cisco ($CSCO), Nvidia ($NVDA), Applied Materials ($AMAT), Marathon Oil ($MRO), TripAdvisor ($TRIP), AIG ($AIG), DoorDash ($DASH), and Cheesecake Factory ($CAKE).

Underneath the surface, retail sales (out at 0830) could create a fresh point of concern if they come in weaker than anticipated.

And of course we have the Fed looming, but not sure what the FOMC minutes (out at 1400) will do about that. Fed officials have made their stances pretty clear in public comments these last couple of weeks.

Add it all up and it could make for a pretty quiet day — Russia-Ukraine notwithstanding.

Full briefing and podcast here:
Have never met someone that actually owns $CAKE but I sure do enjoy the restaurant. I'm not sure about their business model but I sure am bullish on their waiters'/waitresses' memories. That menu is an encyclopedia!
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