Whoah, a 45 minute video? Brings me back to the good old days! This video took a bit more effort than the usual one, so I appreciate anyone that hits the thumbs up, and I hope you all have a great weekend! On a side note - if you like discussing valuation, stocks, join the discord, it also comes with access to qualtrim (the website used in this video), it's all included with the one patreon membership: www.patreon.com/josephcarlson
Have you ever thought of our are you in the works of making qualtrim into an app? I'm rarely on the computer and would be over the moon if I could get a formatted version of this on my phone. I'm not a member yet so I don't know, maybe the website translates well onto a phone to begin with, I'd love to hear if it works good for anyone already. Amazing videos, keep up the great work and congrats on the new addition to the family!
This was interesting, but what I missed, how you came to your estimations (undervalued, fair, overvalued). To be honest most of your undervalued figures were too high for me. I do not see Apple with 140 undervalued, the valuation is still high. I bought Apple with far better valuations in the past and the main reason why this stock is still so stable is the fact, that Berkshire is buying quite a lot of them. So this is some safety at the moment, but overall a bit risky. I do not see Microsoft undervalued as well, the future growth is not that secure. So if I want to buy Microsoft I would wait for lower prices. But I can be totally wrong. So everyone has different assumptions what is cheap/expensive. Over the long run (15+ years) you will win with most of these companies, because they will grow over the time. That´s why I do not care too much about the short term valuations. I only look, if the business modell works, the share has a reasonable price and after buying it, I look may be one time per year if the business modell ist still valid. Tajke Disney for example: The business modell is at the moment weak and you can bet, if this changes. So the price for the todays business modell ist expensive, but if the streaming modell works out, it is cheap in the future. We do not have a crystall ball, so everything can happen. That´s why I do not take too many time to look at every information I can get. If I buy Alphabet, Johnson&Johnson, Royal Bank of Canada (only examples) today I get a low purchasing prise due to the weak market and if the companies are doing well in the future I will get profitable positions. The possibility is very high, that 2 out of 3 exactly will do it.
1:39 In many companies, higher share prices, create rewards for the upper managers. How this work isn't always obvious. Often short spikes in share prices, on the stock market, is rewarding the management unproportionally more, than the penalty for falls in share prices. The easiest method to temporarily increase share prices, is share buybacks. More often than not, share buybacks is done in a manner that make the company less healthy, and in a way that just create temporary spikes in share price, as well as total company stock market valuation. Share buybacks can also be used, to hide a continuous decline in value of the company. As long as the stock price go up, it's easy to be fooled to think that this means that the total value of the company also have increased. Of course, as long as the company doesn't cook the numbers, this can be discovered, by digging deeper into the company's financial reports. Share buybacks can also be used to cook the numbers, or to make it harder to discover if the company cook the numbers in other ways. A vicious downward spiral can be created. Share buybacks is marketed as always being a good thing, it's definitely not. It can be, but only if the management deciding on the buybacks is honest and self aware, *or* if share buybacks doesn't create any personal gains for them (monetary, as well as psychological). *The opposite management behavior, diluting the number of shares, isn't always good either.* But like share buybacks, it can be a good thing, when done right. In many companies, increased dividends, means increased rewards for upper management. If a company is cash poor, one way to get money to finance increasing dividends to current share holders, is to sell newly issued stock to new shareholders. Of course, this is a one time solution: the next dividend, the new shareholders also must be paid a dividend. Some companies create pyramid schemes, where increasing dividends, is only financed by a continuous dilution of the number of shares, by issuing new shares. Issuing new stock, is also often used to finance perks for management, or financing vanity projects. If a company has bad ideas, bad finances, or bad cash flow, it's hard to get a loan from the bank, to finance frivolous spending. On the other hand. Issuing new stock, is often the best way to finance changes that increase the value of the company, as well as individual company shares, much better than getting a loan from a bank. *Especially in a high rent environment.* Whether value is created by buying another company, paying with newly issued stock, or financing buying more machinery, farm land, building a new factory et c. So, both share buybacks and diluting the number of stocks, by issuing new stock, can be good things. And both things, is often used by management, to create gains that only benefit themselves, and is detrimental to the company. It's really odd that share buybacks has a reputation, that it's only a good thing; and that issuing new stock, has a reputation of only being something bad.
$SBUX: $40-50 is a good price to buy at.. everything above, you are over paying - incompetent CEO, employee unions. $AAPL: $72-$110 - strong company, just looking to buy cheap. $NKE: $68-$88.. $TROW: $90-$100...for some of those stocks you have crazy high valuations. probably by holding them already at high prices you are trying to convince yourself that they are worth more.
Wall Street pitched so-called quality stoc,ks with high profitability and low debt, as a kind of insurance against whatever the economy might throw at you. Quality stockks have underperformed the S&P500 this year, My $400k portfolio is down by approximately 20 %, any recommendations to scale up my ROI before retirement will be highly appreciated
@Antonio Alejandro yea Antonio well in my opin.ion, the impact of the rise or fall of the U.S. dollar on investments is multi-faceted but learning how to grow your money has never been easier than now that you can explore and experience a truly diverse marketplace passively by using a well-performing portfolio-advisor.
but then how do you calculate these values based on? what metrics? In the video you mentioned referencing to free cash flow and etc but how are the formulas that goes into the actual calculation?
agree with MSFT, I own it since Mr. Nadella took over many years ago, and now is sitting on 650% gain and currently is my biggest position at 14%. I have no desire to sell any share and think it will be my first 10x.
Hey man, thanks for the videos, I do enjoy them. My only criticism is that you seem to be 'selective' in your valuation work. Comparing forward looking PE ratios for Apple and in the next breath contrasting it with trailing FCF yield is a bit misleading. Also, your valuation work is too rosy and does not seem to factor in the massive spike in interest rates. Would you mind sharing your methodology?
I agree with you. I don't know how anyone can think of AAPL, DPZ and NKE as being undervalued. One needs to be objective when looking at risks, e.g. people stop eating out when there's a recession. In the case of AAPL, the lack of innovation and earnings flattening are a huge factor.
I think looking at this in a short term view is wrong because in 10 years from now most these companies will probably double if not more their cash flows
How exactly do you determine the stock prices for the 3 categories of undervalued, fairly valued, and overvalued? Are you doing DCF? A combination of different methods?
I really like the methodology that Terry Smith uses. Basically you look at the current free cash flow yield of the company. You try to get a starting yield that you believe will be at, or above, the rate of the treasuries (lets say 4-5%). Then you try to project the FCF growth over the next 5-10 years. If a company has the same starting yield as treasury, and can reliably grow FCF for the next decade, hopefully doubling it, you will have returns far above the discount rate.
@@JosephCarlsonShow I like to keep the discount rate on individual stocks closer to the market annual return of 8-10% to be more conservative off the bat, but this makes complete sense as well!
Good video. The problem is the climbing interest rate and FEDs hawkish tone. As long as interest rate is rising the stock market will keep getting beaten and eventually crash in a slow motion
VICI is probably the only stock on this list that might stay stable or go up as every other one goes down, given its dividend. Actually, on this list, I think it is the only company that went positive today, and by a good bit, which is saying something considering how much the others dropped. At $29 a share, I'm tempted to get more now, especially because of the aforementioned pattern, but perhaps that's also because I'm anchoring on its past price of $33~.
This is very useful, as all your videos, Joseph. But I don't understand how you come up with a valuation for a stock. What calculation lies behind it? Thanks a lot for sharing all these amazing insights!
I highly recommend you ASML and Infineon, would fit to your investment style. ASML for example has at least 2.5 years of production in their books and nobody else can produce their products.
Hey Joseph, interesting video. I'm about 14 mins in and I have a question. How do you come up with your undervalued/fair/overpriced prices themselves? Is it just a hunch based on the current market price, or do you have some sort of rough formula you use?
He answers this in a reply to Matterz in this comment section. The following is his reply there: "I really like the methodology that Terry Smith uses. Basically you look at the current free cash flow yield of the company. You try to get a starting yield that you believe will be at, or above, the rate of the treasuries (lets say 4-5%). Then you try to project the FCF growth over the next 5-10 years. If a company has the same starting yield as treasury, and can reliably grow FCF for the next decade, hopefully doubling it, you will have returns far above the discount rate."
I should probably go into valuation theory in a future video. There are like a thousand different ways to value a stock, I've looked through many different methodologies. But maybe unsurprisingly, like the comment above said, I really like the way Terry Smith thinks about valuation. In the most simple terms valuation is the combination of two things. Current yield and growth rate. Earnings yield compared to earnings growth. Dividend yield compared to dividend growth. Free cash flow yield compared to free cash flow growth. The metric that Terry prefers is the free cash flow yield, because he thinks it's most comparable to a bond yield. And he basically looks at valuing a company in these terms. For example, if you can buy a company that has a 4% free cash flow yield while growing its cash flows by 10%, it should give a 12% return (all else equal). On the other hand, if you buy a company that has a 3% starting free cash flow yield, you must demand a higher free cash flow growth rate in the future to have the same expected return. My valuations are based around trying to hit that 12% return based on the current cash flows and my expected growth rate of cash flows. So when you're thinking about things in those terms you're basically balancing current yield against what you think the expected growth rate will be over the coming decade. The best case scenario is to have a company that has a currently high yield and you believe it will have a fast and reliable free cash flow growth rate. Those are the companies I've really tried to focus on.
@@JosephCarlsonShow Hey thanks for that explanation Joseph. I'm still learning how this all works, and your information helps me greatly in understanding these terms to build up my knowledge. You're an inspiration.
Stock prices will drop as long as the Fed is raising rates, then stock prices will drop some more when something breaks and recession fears are priced in. Should be a few more months to find some excellent Warren B type value for those with plenty of dry powder.
@@JosephCarlsonShow Thank you for taking the time to reply to me. I never realized there was a specific 'theme' to each channel. Either way, I'm a fan and I love both channels. Thank you!
this is a Great video! But just my thought, I think now is a best time to buy stock at a good rate with inflation 18%. I know everyone is saying stocks are at a discount and all, but just how long will It take for us to recover, obviously there are strategies to maneuver in this present market but these strategies doesn't come common to the average folk, or am I better off putting my money elsewhere?
The uncertainties accompanying this present market is more reasons I have my daily investment decisions guided by a portfolio-coach seeing that their entire skillset is built around going long and short at the same time, both employing profit-oriented strategy and laying off risk as hedge against the inevitable downtrends, coupled with the exclusive information/analysis, it's quite impossible not to outperform. in a nutshell At first hand encounter, I have over $400k invested and have netted approx. $1.5m in return on investment, since using a coach for more than 2years till date.
@@lozanomacedo521 i think this is huge! mind referring me to the coach that guides you please? I have $37k set asides to taste the waters now that stocks are at a discount and my next goal is buying first home, well it's either that or inflation.
@@nicotorres2914 I've shuffled through a few coaches in the past, 'Catherine Louise Marino' has been exceptional till date. She has a wide presence on the web, so you can look up her name and check her out yourself.
I get why u would sell when stuff is Overvalued. But from the looks of it, wouldn't u say ur investing more like a trader than a long-term dividend investor?
This was a great video, Joseph. Your numbers are a bit high for my taste. It would be interesting if you could show your projections and discount rate for these
Great video, your evaluation rationale is always insightful! I'd like to hear your comments on the ocean freight company GOGL as it stands right now, either in video or just a comment here if you have time. TY, Joe.
Sorry but this video is really useless compared to your other vids. These “analyses” are a joke, you think the fair price of Starbucks is xy because you think the Chinese business will do well and you think they have a bright future? That’s not an analysis, that’s going after your feeling.
People can’t ever be grateful for the time it takes to put a video like this together come on guy can’t think to use past videos on how he goes about analyzing or valuing companies and do your bit of own research stop always wanting to be spoonfeed it’ll get you a long way
@@alexandrothegreat7646 it’s not my intention to be spoon fed, I do have my own opinion on stocks. But if you upload a video talking about stocks, in particular when naming concrete price targets, you should be able to back these targets up with more than “I think (!) the China business will do well”. That’s pure speculation at this point.
Nice video, Joseph. Could you explain or could anyone explain why VICI is such an attractive company to own? According to their own financial info provided, 76% of their portfolio rent is concentrated in just two tenants, being Caesars and MGM. Both of have (highly) speculative credit ratings (BB-/B), which seems to me as very risky. Both appear to be loaded with debt. All combined suggests to me to stay far, far away from VICI...
One simple reason. Their rents increase with inflation leaving the shareholder handsomely rewarded regardless of capital appreciation or slight depreciation.
Great content Joseph. I just bought my 200th share of MSFT today, but I'd love to buy a lot more because I agree with you it's cheap right now, and it's a strong business, easily the best of the FAANGM stocks imho.
Joseph, what would it take,in your opinion, for the market to recognize that MSFT is undervalued? Doesn’t the market already expect MFST to do great going forward?
You seem to have forgotten to add a very important segment to your video. Based on what parameters are your valuations for the stocks? There must be some analysis to back the numbers. "I believe this company is worth $$$" is not a real valuation.
Joseph tell me what is your expected return on these valueations? Have you done any discounted cashflow calculation? What is your margine of safety? Im my opinion you are way too high in these valuations to be able to outperform the market and will most likely underperform
Well, I'm certainly not looking for, or "accepting" lower returns. I'd be extremely disappointed to earn 4-5% returns in the long run and my aspirations for the portfolio are much higher than that. The valuation method I used mimics that of Terry Smith. "The valuation of any security is a combination of it's current yield and it's growth rate". Terry Smith prefers using the free cash flow yield plus the free cash flow growth rate. If the free cash flow yield is 4%, and the company grows that yield by 10% per year. Your return, if all else remains equal, will be 14%. That's the gauge I tried to use as a reference point. From there I try to project realistic FCF growth rates of my companies and aim to have all of them return above 10% per year in total returns. On a side note, many of the investors that always demand a HUGE MARGIN OF SAFETY!!! in many cases are just fooling themselves into buying very low quality companies with poor financial ratios that will ultimately give inferior total returns.
@@JosephCarlsonShow Well.. if you do a DCF of what analysts say the eps will be in 2024 you'll get a hot -1% return if you give MSFT the pe of 20 in 2024. A 10 year DCF with 2024 analysts average expectations and use a ridiculous terminal multiple of 1.2 ie 20% EPS growth YOY for the next 7 years pe 15 by year 10. you'll get a compounded return of 11% if you buy MSTF at 300. That is a market return with the best assumptions considering 10years are a really long time in tech and I highly doubt MSFT can command a higher pe than max 18 by that time.
@@sjodda1997 Looking up average analyst estimates and applying a PE ratio is not how I see people outperforming the market. First of all, look at the actual data. How accurate were analyst estimates on Microsofts earnings over the past 5 years? They were way off. Since 2018 analysts have undershot microsofts EPS for 15 times and overshot it once. They almost always miss the mark to the underside, and most the time by a pretty wide margin. Microsoft also compounded EPS at 24% for the past 5 years, far above analyst estimates. In fact, looking back on those years there's so many quarters that microsoft completely blew away analyst expectations that it's comical. They're basically throwing a dart at a board and hoping it lands in the right place. So for me personally, I think just looking at analysts projections and assuming PE contraction is not a great source of insight or analysis on how the company will actually perform.
@@JosephCarlsonShow 1 Estimates are more often right than wrong missing by a few cents. 2 terminal multiple is compounded growth that extends beyond the estimates 3 lets put it in to perspective last 5 years MSFT had eps growth of 24%, average revenue growth last 5 years have been around 15,5% assuming everything will be about the same for 10 years MSFT: revenue will be (198.3B*1,155^10) 837,8B in 2032. That is about the same revenue as Switzerland today, not saying it wont happen but it sounds unlikely.
You say that Munger got it wrong with Baba and the other investor with Meta....but it's too short term to say that they are wrong. 10-15 years down the line is when we can confirm if they got it wrong. No investment is right or wrong in the short term unless you confirm those losses.
i currently have disney+ and their series are mostly high quality. they have a huge catalog and so much opportunity to create new series with franchises which certainly will work (unlike some shots in the dark from netflix). also i consider going to their parks as something you need to afford, which means demand is higher than supply. disney parks are for affluent people or people who save a lot. the licenses for their IP are also wont go away. sounds good to me so far, just wait for the right price (which might be now).
I feel like Disney+ has mostly been a miss for me, even as someone who loves starwars and marvel I just haven't enjoyed most of their shows. I was so excited for most of them but outside of LOKI and the Mandalorian it's been almost all misses for me. Combine that with massive price increases and I see a future where Disney+'s growth really slows.
@@jamesanderson6130 i can enjoy much more. Also content outside of Star Wars (i like the new series very much) and marvel. Pixar with the new Buzz lightyear movie was great, war of the worlds (is it theirs?), snowflake. The catalogue is limited and some is not interesting, but there is much IP to make series. Especially for kids and families. I don’t really care about the price increases. People spend 600 bucks on shoes and pay 20 bucks for each drink in the club and complain to pay 2 bucks more for this service.
During the Disney section he mentioned that Disney's debt will become more expensive. Why is that so if it's past debt? The interest rate of their debt goes up even when they took on debt when interest rates where low?
I bought more GOOGL $95 - $98 and I won’t stop buying more GOOGL if it stays here or goes down further.. DCA every day. I know it will do better then a treasury bond. Yes, I do. Staying Long. I can’t time the market. I just keep buying. Also added ADBE
Google under $100 is where I had decided to start buying a bit ago, been happy to finally make some buys this last week. And I'll just buy more aggressively if the price drops. I'm in the tech space and personally think Google is a bit "GOATED".
Agreed the stock is up 3x in 5 years for no reason. It took decades to get to a $1T valuation and it ripped to a high of $3T in just a few years for no reason.
Do you think 62 and healthy is "old"? Steve Jobs was 56 when he died, but he knew years beforehand that he was dying from stage 4 liver/pancreatic cancer. Warren Buffet is 92, and still calling the shots at Berkshire Hathaway. How old are you?
Those are the companies they founded and have an emotional connection to, its is not quite thesame, tim cook is an employee who in a couple of years may want to retire and enjoy his life.
Dude, the Chairman of the Joint Staffs is 64 y/o. Buffett is like 110. 62 is pretty young. Cook has about 5 years left. Hopefully AAPL gets a visionary and go getter after him.
I first started investing when Disney was approaching the $200 mark during the pandemic and so dollar cost averaging has been one of the strategies that I've been utilizing.
Really like your opinions. Very helpful. Is it helpful for billionaires to keep pointing out signs of the economy crashing to the ground? We little guys have few ways out because our brokers are not equipped and/or refuse to handle emergency rearrangements of our portfolios. So, I have another sign that these billionaires should look for. It involves one finger.
While preparing for retirement or planning to buy a house, the wisest thing that should be on every wise individual's list is to invest in different stream of income; I am earning more this year because I have been investing while working at the same time. I invested through *TERESA JENSEN WHITE,* same woman that an anchor ‘Jim Cramer’ kept mentioning on CNBC, and made multiple of my start up capital within three months . She lives here in the USA and she is licensed
Whoah, a 45 minute video? Brings me back to the good old days!
This video took a bit more effort than the usual one, so I appreciate anyone that hits the thumbs up, and I hope you all have a great weekend!
On a side note - if you like discussing valuation, stocks, join the discord, it also comes with access to qualtrim (the website used in this video), it's all included with the one patreon membership: www.patreon.com/josephcarlson
Have you ever thought of our are you in the works of making qualtrim into an app? I'm rarely on the computer and would be over the moon if I could get a formatted version of this on my phone. I'm not a member yet so I don't know, maybe the website translates well onto a phone to begin with, I'd love to hear if it works good for anyone already. Amazing videos, keep up the great work and congrats on the new addition to the family!
Joseph, how did you come up with those nice rounded valuation numbers?
A second part is needed :) More stocks!
Saw people request the video and you did it! Much appreciated!
Love the long format videos!
This was interesting, but what I missed, how you came to your estimations (undervalued, fair, overvalued). To be honest most of your undervalued figures were too high for me. I do not see Apple with 140 undervalued, the valuation is still high. I bought Apple with far better valuations in the past and the main reason why this stock is still so stable is the fact, that Berkshire is buying quite a lot of them. So this is some safety at the moment, but overall a bit risky. I do not see Microsoft undervalued as well, the future growth is not that secure. So if I want to buy Microsoft I would wait for lower prices. But I can be totally wrong. So everyone has different assumptions what is cheap/expensive. Over the long run (15+ years) you will win with most of these companies, because they will grow over the time. That´s why I do not care too much about the short term valuations. I only look, if the business modell works, the share has a reasonable price and after buying it, I look may be one time per year if the business modell ist still valid. Tajke Disney for example: The business modell is at the moment weak and you can bet, if this changes. So the price for the todays business modell ist expensive, but if the streaming modell works out, it is cheap in the future. We do not have a crystall ball, so everything can happen. That´s why I do not take too many time to look at every information I can get. If I buy Alphabet, Johnson&Johnson, Royal Bank of Canada (only examples) today I get a low purchasing prise due to the weak market and if the companies are doing well in the future I will get profitable positions. The possibility is very high, that 2 out of 3 exactly will do it.
We need to know what discount rate he is using. 140$ for Apple could be good if he expects a return of 7-8% per year
I love how your thumbnails actually show what you are talking about no clickbaits like these other "financial" scam vids. Thanks for your hard work.
How did you come up with those valuation numbers ?
Nice job. I would have liked a discussion of how you came up with the various low- fair- and over-valued. Where did those numbers come from?
1:39 In many companies, higher share prices, create rewards for the upper managers. How this work isn't always obvious. Often short spikes in share prices, on the stock market, is rewarding the management unproportionally more, than the penalty for falls in share prices. The easiest method to temporarily increase share prices, is share buybacks. More often than not, share buybacks is done in a manner that make the company less healthy, and in a way that just create temporary spikes in share price, as well as total company stock market valuation.
Share buybacks can also be used, to hide a continuous decline in value of the company. As long as the stock price go up, it's easy to be fooled to think that this means that the total value of the company also have increased. Of course, as long as the company doesn't cook the numbers, this can be discovered, by digging deeper into the company's financial reports. Share buybacks can also be used to cook the numbers, or to make it harder to discover if the company cook the numbers in other ways. A vicious downward spiral can be created.
Share buybacks is marketed as always being a good thing, it's definitely not. It can be, but only if the management deciding on the buybacks is honest and self aware, *or* if share buybacks doesn't create any personal gains for them (monetary, as well as psychological).
*The opposite management behavior, diluting the number of shares, isn't always good either.* But like share buybacks, it can be a good thing, when done right.
In many companies, increased dividends, means increased rewards for upper management. If a company is cash poor, one way to get money to finance increasing dividends to current share holders, is to sell newly issued stock to new shareholders. Of course, this is a one time solution: the next dividend, the new shareholders also must be paid a dividend. Some companies create pyramid schemes, where increasing dividends, is only financed by a continuous dilution of the number of shares, by issuing new shares.
Issuing new stock, is also often used to finance perks for management, or financing vanity projects. If a company has bad ideas, bad finances, or bad cash flow, it's hard to get a loan from the bank, to finance frivolous spending.
On the other hand. Issuing new stock, is often the best way to finance changes that increase the value of the company, as well as individual company shares, much better than getting a loan from a bank. *Especially in a high rent environment.* Whether value is created by buying another company, paying with newly issued stock, or financing buying more machinery, farm land, building a new factory et c.
So, both share buybacks and diluting the number of stocks, by issuing new stock, can be good things. And both things, is often used by management, to create gains that only benefit themselves, and is detrimental to the company. It's really odd that share buybacks has a reputation, that it's only a good thing; and that issuing new stock, has a reputation of only being something bad.
$SBUX: $40-50 is a good price to buy at.. everything above, you are over paying - incompetent CEO, employee unions. $AAPL: $72-$110 - strong company, just looking to buy cheap. $NKE: $68-$88.. $TROW: $90-$100...for some of those stocks you have crazy high valuations. probably by holding them already at high prices you are trying to convince yourself that they are worth more.
Would really appreciate a breakdown as to how you got to these prices!
I don't see BST in your list. Where did it go? Did you sell it already?
Greetings from 🇵🇱 Poland
Another excellent video packed with great information.
Wall Street pitched so-called quality stoc,ks with high profitability and low debt, as a kind of insurance against whatever the economy might throw at you. Quality stockks have underperformed the S&P500 this year, My $400k portfolio is down by approximately 20 %, any recommendations to scale up my ROI before retirement will be highly appreciated
@Antonio Alejandro yea Antonio well in my opin.ion, the impact of the rise or fall of the U.S. dollar on investments is multi-faceted but learning how to grow your money has never been easier than now that you can explore and experience a truly diverse marketplace passively by using a well-performing portfolio-advisor.
Amazing content Joseph, as always. Stay the course!
this is the best bit about your channel, it shows me what is on sale and what's not, more of this 👍🏻
Could you make a video regarding how to evaluate and calculate the price of the stocks (over or under or fair) ?
Thanks for your input sir. Appreciate the amount of value you add in your vids compared to other channels.
but then how do you calculate these values based on? what metrics? In the video you mentioned referencing to free cash flow and etc but how are the formulas that goes into the actual calculation?
How you estimate cash flow growth and whatdiscount rate makes the returns fair for starbuck
Would love to hear your opinion on the JNJ Kenvue spin-off as well as the Prologis and Duke Realty merger in a future video. Thanks for the content!
Excellent, thank you . You should do a follow up in a year to see what
Assumptions were right or wrong, and what surprised occurred
Hey Joseph, why are you going for CP over CNR/CNI the biggest and more profitable of the two railroads in Canada?
Do your valuations factor in interest rates?
agree with MSFT, I own it since Mr. Nadella took over many years ago, and now is sitting on 650% gain and currently is my biggest position at 14%. I have no desire to sell any share and think it will be my first 10x.
you can add more MSFT if it reaches somewhere around 180 to 200
@@DS-vx3wf Agreed on this pricing. I'm looking to load up as soon as it goes under $200 a share
how do you price these?
You are pricing companies like microsoft like they will continue to grow at these exceptional rates. It's very risky pricing companies at perfection.
Hey man, thanks for the videos, I do enjoy them. My only criticism is that you seem to be 'selective' in your valuation work. Comparing forward looking PE ratios for Apple and in the next breath contrasting it with trailing FCF yield is a bit misleading. Also, your valuation work is too rosy and does not seem to factor in the massive spike in interest rates. Would you mind sharing your methodology?
I agree with you. I don't know how anyone can think of AAPL, DPZ and NKE as being undervalued. One needs to be objective when looking at risks, e.g. people stop eating out when there's a recession. In the case of AAPL, the lack of innovation and earnings flattening are a huge factor.
I think looking at this in a short term view is wrong because in 10 years from now most these companies will probably double if not more their cash flows
How exactly do you determine the stock prices for the 3 categories of undervalued, fairly valued, and overvalued? Are you doing DCF? A combination of different methods?
I really like the methodology that Terry Smith uses. Basically you look at the current free cash flow yield of the company. You try to get a starting yield that you believe will be at, or above, the rate of the treasuries (lets say 4-5%). Then you try to project the FCF growth over the next 5-10 years. If a company has the same starting yield as treasury, and can reliably grow FCF for the next decade, hopefully doubling it, you will have returns far above the discount rate.
@@JosephCarlsonShow I like to keep the discount rate on individual stocks closer to the market annual return of 8-10% to be more conservative off the bat, but this makes complete sense as well!
A company can be as good as you want but if the political situation is so unstable worldwide, it is very hard to predict what will happen.
Like the Spanish Flu, Pear Harbor, or 9/11.
How much is the S&P/Dow up in 100yrs!?
Good video. The problem is the climbing interest rate and FEDs hawkish tone. As long as interest rate is rising the stock market will keep getting beaten and eventually crash in a slow motion
How do you factor in possible risk regarding interntional events, particularly those with China? Is that in the overpay category?
VICI is probably the only stock on this list that might stay stable or go up as every other one goes down, given its dividend. Actually, on this list, I think it is the only company that went positive today, and by a good bit, which is saying something considering how much the others dropped. At $29 a share, I'm tempted to get more now, especially because of the aforementioned pattern, but perhaps that's also because I'm anchoring on its past price of $33~.
Valuation is subjective. It’s not what YOU think is undervalued it’s if everyone else thinks the same.
This is very useful, as all your videos, Joseph. But I don't understand how you come up with a valuation for a stock. What calculation lies behind it? Thanks a lot for sharing all these amazing insights!
Just noticed that you have a dedicated video for this and watched it. Very insightful as always, thank you Joseph!
I highly recommend you ASML and Infineon, would fit to your investment style. ASML for example has at least 2.5 years of production in their books and nobody else can produce their products.
Hey Joseph, interesting video. I'm about 14 mins in and I have a question. How do you come up with your undervalued/fair/overpriced prices themselves? Is it just a hunch based on the current market price, or do you have some sort of rough formula you use?
He answers this in a reply to Matterz in this comment section. The following is his reply there:
"I really like the methodology that Terry Smith uses. Basically you look at the current free cash flow yield of the company. You try to get a starting yield that you believe will be at, or above, the rate of the treasuries (lets say 4-5%). Then you try to project the FCF growth over the next 5-10 years. If a company has the same starting yield as treasury, and can reliably grow FCF for the next decade, hopefully doubling it, you will have returns far above the discount rate."
@@Ditronus. Thank you! Much appreciated.
I should probably go into valuation theory in a future video. There are like a thousand different ways to value a stock, I've looked through many different methodologies. But maybe unsurprisingly, like the comment above said, I really like the way Terry Smith thinks about valuation.
In the most simple terms valuation is the combination of two things. Current yield and growth rate. Earnings yield compared to earnings growth. Dividend yield compared to dividend growth. Free cash flow yield compared to free cash flow growth.
The metric that Terry prefers is the free cash flow yield, because he thinks it's most comparable to a bond yield. And he basically looks at valuing a company in these terms. For example, if you can buy a company that has a 4% free cash flow yield while growing its cash flows by 10%, it should give a 12% return (all else equal). On the other hand, if you buy a company that has a 3% starting free cash flow yield, you must demand a higher free cash flow growth rate in the future to have the same expected return. My valuations are based around trying to hit that 12% return based on the current cash flows and my expected growth rate of cash flows. So when you're thinking about things in those terms you're basically balancing current yield against what you think the expected growth rate will be over the coming decade. The best case scenario is to have a company that has a currently high yield and you believe it will have a fast and reliable free cash flow growth rate. Those are the companies I've really tried to focus on.
@@JosephCarlsonShow Hey thanks for that explanation Joseph.
I'm still learning how this all works, and your information helps me greatly in understanding these terms to build up my knowledge. You're an inspiration.
Yet another great content video, keep up the good work👏🏼 love your explanation of your valuation as well👍🏼
Listening to this while at work. Great stuff as usual Joseph!
Stock prices will drop as long as the Fed is raising rates, then stock prices will drop some more when something breaks and recession fears are priced in. Should be a few more months to find some excellent Warren B type value for those with plenty of dry powder.
Please do a video on Nike getting smashed this week.
Can you look at ally and capital one?
Once had Texas Roadhead
Good video Joseph, but how come Amazon, Google or Facebook didn't make this video? Thanks.
It’s a beautiful thing to get GOOGL at $95 IMO. I need to add to AMZN too, but running out of dough. Every paycheck will add
I guess because they aren't paying dividends and this channel is about Dividend Growth Portfolio
I cover those companies on my second UA-cam channel.
@@JosephCarlsonShow Thank you for taking the time to reply to me. I never realized there was a specific 'theme' to each channel. Either way, I'm a fan and I love both channels. Thank you!
Thanks for your analysis. Why no Dominos you were so bullish on it earlier?
this is a Great video! But just my thought, I think now is a best time to buy stock at a good rate with inflation 18%. I know everyone is saying stocks are at a discount and all, but just how long will It take for us to recover, obviously there are strategies to maneuver in this present market but these strategies doesn't come common to the average folk, or am I better off putting my money elsewhere?
The uncertainties accompanying this present market is more reasons I have my daily investment decisions guided by a portfolio-coach seeing that their entire skillset is built around going long and short at the same time, both employing profit-oriented strategy and laying off risk as hedge against the inevitable downtrends, coupled with the exclusive
information/analysis, it's quite impossible not to outperform. in a nutshell At first hand encounter, I have over $400k invested and have netted approx. $1.5m in return on investment, since using a coach for more than 2years till date.
@@lozanomacedo521 i think this is huge! mind referring me to the coach that guides you please? I have $37k set asides to taste the waters now that stocks are at a discount and my next goal is buying first home, well it's either that or inflation.
@@nicotorres2914 I've shuffled through a few coaches in the past, 'Catherine Louise Marino' has been exceptional till date. She has a wide presence on the web, so you can look up her name and check her out yourself.
Bots having a convo in this thread lol
I still don’t understand how you got these numbers. What formula are you going off of?
What is a dollar worth
Hello you should add the ROCE evolution as well or at least the TTM value
I get why u would sell when stuff is Overvalued. But from the looks of it, wouldn't u say ur investing more like a trader than a long-term dividend investor?
I don't blame him, the writing is on the wall. The opportunity is presenting itself to us, I sold out of all my stocks and going heavy into cash.
You are a very decent investor
Update of this?
Very good video. Thank you for this evaluation.
This was a great video, Joseph. Your numbers are a bit high for my taste. It would be interesting if you could show your projections and discount rate for these
Great video, your evaluation rationale is always insightful! I'd like to hear your comments on the ocean freight company GOGL as it stands right now, either in video or just a comment here if you have time. TY, Joe.
Thank you... this was a great analysis...
Sorry but this video is really useless compared to your other vids. These “analyses” are a joke, you think the fair price of Starbucks is xy because you think the Chinese business will do well and you think they have a bright future? That’s not an analysis, that’s going after your feeling.
People can’t ever be grateful for the time it takes to put a video like this together come on guy can’t think to use past videos on how he goes about analyzing or valuing companies and do your bit of own research stop always wanting to be spoonfeed it’ll get you a long way
Nah y’all just freeloaders
That don’t know how to be grateful
@@alexandrothegreat7646 it’s not my intention to be spoon fed, I do have my own opinion on stocks. But if you upload a video talking about stocks, in particular when naming concrete price targets, you should be able to back these targets up with more than “I think (!) the China business will do well”. That’s pure speculation at this point.
Great stuff! But where is AMZN? ;)
I was kind of shocked about costco undervalued price.
how can we value a company with increasing interest rates. What we value today is less tomorrow due to fast paced interest hikes by FED
Why are we normalising the last free cash flow yield of target? I didn’t understand 😅
Nice video, Joseph. Could you explain or could anyone explain why VICI is such an attractive company to own? According to their own financial info provided, 76% of their portfolio rent is concentrated in just two tenants, being Caesars and MGM. Both of have (highly) speculative credit ratings (BB-/B), which seems to me as very risky. Both appear to be loaded with debt. All combined suggests to me to stay far, far away from VICI...
One simple reason. Their rents increase with inflation leaving the shareholder handsomely rewarded regardless of capital appreciation or slight depreciation.
Great content Joseph.
I just bought my 200th share of MSFT today, but I'd love to buy a lot more because I agree with you it's cheap right now, and it's a strong business, easily the best of the FAANGM stocks imho.
Love this series btw, but that jab at Charlie at the end... 😉
Can you do a video on reliable dividend stocks for new investors in 2022?
Good video! As a holder of Adobe, I wondered why you didn't discuss the company? :)
Joseph, what would it take,in your opinion, for the market to recognize that MSFT is undervalued? Doesn’t the market already expect MFST to do great going forward?
Fed stop being bullish on IR & tryna sink employment..MSFT everyone already knows its a great company
Very useful. More like this, please!!
I am sure that was a lot of work. Thank you for providing great content.
You seem to have forgotten to add a very important segment to your video. Based on what parameters are your valuations for the stocks? There must be some analysis to back the numbers. "I believe this company is worth $$$" is not a real valuation.
Joseph tell me what is your expected return on these valueations? Have you done any discounted cashflow calculation? What is your margine of safety?
Im my opinion you are way too high in these valuations to be able to outperform the market and will most likely underperform
@Johan Sjödin I agree with you completely. He seems to be ok with getting a 4-5% return over the long term.
Well, I'm certainly not looking for, or "accepting" lower returns. I'd be extremely disappointed to earn 4-5% returns in the long run and my aspirations for the portfolio are much higher than that.
The valuation method I used mimics that of Terry Smith. "The valuation of any security is a combination of it's current yield and it's growth rate". Terry Smith prefers using the free cash flow yield plus the free cash flow growth rate.
If the free cash flow yield is 4%, and the company grows that yield by 10% per year. Your return, if all else remains equal, will be 14%.
That's the gauge I tried to use as a reference point. From there I try to project realistic FCF growth rates of my companies and aim to have all of them return above 10% per year in total returns.
On a side note, many of the investors that always demand a HUGE MARGIN OF SAFETY!!! in many cases are just fooling themselves into buying very low quality companies with poor financial ratios that will ultimately give inferior total returns.
@@JosephCarlsonShow Well.. if you do a DCF of what analysts say the eps will be in 2024 you'll get a hot -1% return if you give MSFT the pe of 20 in 2024. A 10 year DCF with 2024 analysts average expectations and use a ridiculous terminal multiple of 1.2 ie 20% EPS growth YOY for the next 7 years pe 15 by year 10. you'll get a compounded return of 11% if you buy MSTF at 300. That is a market return with the best assumptions considering 10years are a really long time in tech and I highly doubt MSFT can command a higher pe than max 18 by that time.
@@sjodda1997 Looking up average analyst estimates and applying a PE ratio is not how I see people outperforming the market. First of all, look at the actual data. How accurate were analyst estimates on Microsofts earnings over the past 5 years?
They were way off. Since 2018 analysts have undershot microsofts EPS for 15 times and overshot it once. They almost always miss the mark to the underside, and most the time by a pretty wide margin. Microsoft also compounded EPS at 24% for the past 5 years, far above analyst estimates. In fact, looking back on those years there's so many quarters that microsoft completely blew away analyst expectations that it's comical. They're basically throwing a dart at a board and hoping it lands in the right place.
So for me personally, I think just looking at analysts projections and assuming PE contraction is not a great source of insight or analysis on how the company will actually perform.
@@JosephCarlsonShow 1 Estimates are more often right than wrong missing by a few cents.
2 terminal multiple is compounded growth that extends beyond the estimates
3 lets put it in to perspective last 5 years MSFT had eps growth of 24%, average revenue growth last 5 years have been around 15,5% assuming everything will be about the same for 10 years MSFT: revenue will be (198.3B*1,155^10) 837,8B in 2032. That is about the same revenue as Switzerland today, not saying it wont happen but it sounds unlikely.
Apple is in my top 5 investments. When I see you are bullish on Apple I get nervous 😂😂😂😂
Could you please look at the Hershey stock
You say that Munger got it wrong with Baba and the other investor with Meta....but it's too short term to say that they are wrong. 10-15 years down the line is when we can confirm if they got it wrong. No investment is right or wrong in the short term unless you confirm those losses.
When you say Microsoft has 47% upside, what’s your time horizon? What’s the fundamental underlying reasonings for justifying such claim for 47%?
Whats your thoughts on Puma. They have excellent growth as a company, a well recognised brand, a good dividend etc
Why no Google???
So much great information! Thanks heaps Joseph
Love this type of content, thank you! Costco is a stock I’d love but have a buy in price of $400 so I hope it gets there.
Wait I must be late af when did Joseph sell realty income and for what reason?
Yea I sold it last year and put it into vici.
i currently have disney+ and their series are mostly high quality. they have a huge catalog and so much opportunity to create new series with franchises which certainly will work (unlike some shots in the dark from netflix). also i consider going to their parks as something you need to afford, which means demand is higher than supply. disney parks are for affluent people or people who save a lot. the licenses for their IP are also wont go away. sounds good to me so far, just wait for the right price (which might be now).
I feel like Disney+ has mostly been a miss for me, even as someone who loves starwars and marvel I just haven't enjoyed most of their shows. I was so excited for most of them but outside of LOKI and the Mandalorian it's been almost all misses for me. Combine that with massive price increases and I see a future where Disney+'s growth really slows.
Their shows are woke garbage that people ridicule and run from. The future of Disney + does not look bright
@@jamesanderson6130 i can enjoy much more. Also content outside of Star Wars (i like the new series very much) and marvel. Pixar with the new Buzz lightyear movie was great, war of the worlds (is it theirs?), snowflake.
The catalogue is limited and some is not interesting, but there is much IP to make series. Especially for kids and families.
I don’t really care about the price increases. People spend 600 bucks on shoes and pay 20 bucks for each drink in the club and complain to pay 2 bucks more for this service.
Your method of investing is perfectly aligned with peter lynchs strategy on investing. I’m sure you read “one up wall st.”
During the Disney section he mentioned that Disney's debt will become more expensive. Why is that so if it's past debt? The interest rate of their debt goes up even when they took on debt when interest rates where low?
Because, the debt is probably not like a 30 year fixed rate mortgage, but of variable rate. It goes up when the rates goes up and vice versa.
Vici That dividend payout ratio......... you have not concern about that?
Thanks, great content.
great content.never miss any single video you posted
How did you get to these figures, @JosephCarlsonShow?
I bought more GOOGL $95 - $98 and I won’t stop buying more GOOGL if it stays here or goes down further..
DCA every day. I know it will do better then a treasury bond. Yes, I do. Staying Long. I can’t time the market. I just keep buying. Also added ADBE
Google under $100 is where I had decided to start buying a bit ago, been happy to finally make some buys this last week. And I'll just buy more aggressively if the price drops. I'm in the tech space and personally think Google is a bit "GOATED".
Yay! Long videos like the olden days!
Great episode!
Are you against DCA into these companies on a weekly basis?
I do DCA into them weekly.
Apple is a buy at $80sh but still won't buy Microsoft same the most loved stocks
I doubt we will ever see $80
Agreed the stock is up 3x in 5 years for no reason. It took decades to get to a $1T valuation and it ripped to a high of $3T in just a few years for no reason.
What about STARBUCKS 's staggering DEBT?
Apple: Tim Cook is 62 years old in a month. Has there been talk of a succession plan?
Do you think 62 and healthy is "old"?
Steve Jobs was 56 when he died, but he knew years beforehand that he was dying from stage 4 liver/pancreatic cancer.
Warren Buffet is 92, and still calling the shots at Berkshire Hathaway.
How old are you?
Those are the companies they founded and have an emotional connection to, its is not quite thesame, tim cook is an employee who in a couple of years may want to retire and enjoy his life.
Dude, the Chairman of the Joint Staffs is 64 y/o. Buffett is like 110. 62 is pretty young. Cook has about 5 years left. Hopefully AAPL gets a visionary and go getter after him.
Buffet is in his 90s and Biden in his 80s, 62 is the new 30
@@amgjens You don't think he is enjoying life now as the CEO of the world's greatest company?
Mayb you shld look at SAP SE.
I think the best you can do in such a bear market is just DCA every Week / Month
I first started investing when Disney was approaching the $200 mark during the pandemic and so dollar cost averaging has been one of the strategies that I've been utilizing.
Really like your opinions. Very helpful. Is it helpful for billionaires to keep pointing out signs of the economy crashing to the ground? We little guys have few ways out because our brokers are not equipped and/or refuse to handle emergency rearrangements of our portfolios. So, I have another sign that these billionaires should look for. It involves one finger.
Microsoft rated higher than the US Gov? Doesn’t make sense
All my stocks are seemingly crazy undervalued, yet they keep going down every week. Sad.
Is your goal to sell jpm when it gets to 140* ?
While preparing for retirement or planning to buy a house, the wisest thing that should be on every wise individual's list is to invest in different stream of income; I am earning more this year because I have been investing while working at the same time. I invested through *TERESA JENSEN WHITE,* same woman that an anchor ‘Jim Cramer’ kept mentioning on CNBC, and made multiple of my start up capital within three months . She lives here in the USA and she is licensed
I can’t drop her info here, Just do a web lookup using her full name and connect to her official webpage ..
In my opinion you should replace T Rowe Price with Blackrock, Canadian Pacific with Old Dominion Freight Line & Target with Estée Lauder or LVMH.