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Recent Articles
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3 Net-Cash-Rich, Free-Cash-Flow Generating, Secular Growth Powerhouses
Oct 30, 2023
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Image: Shares of Microsoft, Alphabet, and Meta Platforms have trounced the market return so far in 2023.
We think a holistic view to a company's fundamentals provides an upper hand when it comes to outperforming the market, but we also feel that the discounted cash-flow model is an indispensable tool to help investors collect all of their thoughts and quantitatively put them together within valuation to arrive at what a company is worth. After all, the stock market is an expectations game, where expectations of free cash flow form the baseline for value, and changes in them heavily influence the direction of share prices. We like stocks that have strong net cash positions on the books and have a high probability of achieving better-than-expected free-cash-flow generation in coming years. In this article, we'll talk about the cash-based sources of intrinsic value at three large cap growth names.
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Getting Down to Brass Tacks on Amazon’s Cash-Based Sources of Intrinsic Value
Oct 27, 2023
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Image: Amazon had a very strong and better-than-expected third-quarter report, and the firm is now on pace to generate positive free cash flow during 2023.
As reported in Amazon’s third-quarter 2023 press release, the retail giant’s “free cash flow improved to an inflow of $21.4 billion for the trailing twelve months, compared with an outflow of $19.7 billion for the trailing twelve months ended September 30, 2022.” Cash and marketable securities were ~$64.2 billion at the end of its third quarter compared to ~$61.1 billion in long-term debt, meaning that Amazon has a modest net cash position, but nothing near the likes of other big cap tech and large cap growth peers. All eyes will continue to be on Amazon Web Services [AWS] and its growth trajectory, but when it comes to the cash-based sources of intrinsic value, Amazon is back on the right track.
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Dividend Increases/Decreases for the Week of October 27
Oct 27, 2023
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Let's take a look at firms raising/lowering their dividends this week.
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Chipotle’s Long-Term Growth Outlook Intact
Oct 26, 2023
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On October 26, Chipotle Mexican Grill reported better-than-expected third-quarter results with the top line increasing 11.3% on a year-over-year basis and non-GAAP earnings per share beating the consensus estimate. Comparable store sales advanced 5% in the period, while the company drove meaningful improvement in its operating margin, despite nagging inflationary pressures in beef and cheese prices. We’re huge fans of Chipotle’s long-term unit growth story, and we expect the rollout of Chipotlane drivethru’s to pave the way for an expanded menu, maybe in the breakfast daypart in the years ahead.
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