I'm excited about this week. The next five days around half
the stock market is reporting earnings.
Many of the biggest companies in the market, the biggest drivers
of the market, they're giving us some insight into how they're
doing. That's all earnings reports are,
is a look inside the company at how things are progressing.
And I think that's a lot of fun to look at because as an
investor, I want to see that my companies are moving along,
gaining in their earnings per share, gaining in their free
cash flow per share. They're gaining more customers.
The mote is widening. I want to see all those
important metrics improving over time and earning season gets us
a chance to get more data points on our companies, which I think
is really, really fun. So this next 5 days is going to
be a very busy, hectic, important week and it's going to
drive the market either further up or things are going to
stagnate. And we might have a little bit
of a sell off because many of the biggest, most important
companies are showing what they're doing.
Now if we look specifically at the week and what's reporting
earnings, you can see the significance of this.
We have some of the biggest companies highlighted here, but
I also underline the ones that I think are the most significant.
Starting off the week, we had Sofi just report earnings,
they're up big. So that's a good start to the
week. But then moving into Tuesday, we
get to some bigger companies. We have MSCI there.
I highlighted this one because MSCI is an industry business
similar to S&P Global and it is an incredibly strong business.
I think that thing is a genuine compounding machine.
So it's one that I keep on my watch list.
I think it's a wonderful company.
I want to see how it's doing. Now we have some other companies
that are blue chip average, S&P 500 companies, JetBlue, UPSGM,
Pfizer. I'm not as interested in those
ones. I want to look at big tech,
Microsoft, AMD, Google, Starbucks, and then I'll also I
have to take a look at Canadian Pacific because I'm invested in
that one. But this day, Tuesday of this
week, Microsoft and Google reporting earnings is going to
be huge. Microsoft has to do well, and
they usually do. So I'll be going over my
predictions of Microsoft what I think Azure growth will be.
I'll also be looking at Google. What I expect to see with
tightening up their business a bit, cutting costs and growing
their cloud business, I have high expectations for Google as
an investor in that company as well.
And then we get to see how the food companies are doing.
Starbucks will be a tell of how well Chipotle will do and how
well Texas Roadhouse will do. That's the biggest food chain in
the world. Starbucks is massive.
It's bigger than McDonald's. So this company's dramatically
important to the food industry. Moving on throughout the week,
on Wednesday, we have a lot of, again, your average blue chip
companies. We don't have time to go over
all of these. So we're not going to be talking
about Boeing or Qualcomm, you know Aflac, all these companies.
The one that I highlighted was MasterCard because I'm invested
in that company. I want to see how they're doing.
And then Thursday, that is the other big day this week,
Thursday, we have Apple, Amazon and Meta reporting earnings.
Apple and Amazon are two companies that really move the
market. These are massive, massive
companies. With Apple.
We want to see resumed growth for a company that has stalled
with Amazon. We want to see good ads business
growth and we want to see, of course the Azure cloud business.
A lot of people focus on the cloud, but I think the ads
business is equally important. So we'll be looking at the
specific numbers with those two. And then finally, we have meta,
which is going big into AI. They're buying a lot of chips
from NVIDIA. They're trying to create a big
AI powerhouse. So we have a busy week to get
into. We're going to be going over all
of those companies in this video left to right, Monday through
Friday. I think it's going to be a fun 1
to get into. Now let's go ahead and start off
the week by looking on Monday, Monday before market open.
The most significant earnings report was Sofi.
This is like a financial institution.
So it's like Ally Financial, but they have some technology aspect
to it where they create software for managing investments in that
type of stuff. So it's a fintech company in
some parts. I view Sofi as mostly a bank.
I think it's mostly a bank with some financial technology stuff
mixed in. So I don't find it the most
attractive investment, but I am excited about how the company's
doing. Today.
It's up 22%. It had a very rough start to the
year, but it's recovered just in a day.
So it's basically flat this year.
Now we have a note here from Qualtrum.
This says that Sofi shares are trading higher after the company
reported better than expected Q4 revenues and that's what I
expect with these type of companies.
The only reason there's going to be a big jump in a company like
this up 22% is because they really beat out investors
expectations. They reported something much
better similar to Netflix reporting that they gained 13
million subscribers when the Street was expecting like 9
million. That's such a massive beat and
expectations the stock jumped as a result.
So if you're investing in a company, that's the biggest
reason it's going to change after market close.
Now in terms of analyst estimates, this is something
that I recently added in the Qualtrum.
We have a new section here. If you Scroll down below the
charts, it says analyst estimates right here above the
new section and you can see the current quarter, that's the
upcoming one. Right here you can see the
current year, this is 2023 and then you can see next year, 2024
for each company. This will show you the number of
analysts covering this company. In this case, it's 12 analysts
covering Sofi. It'll show you the average
estimate of all those 12, and then it will show you the low
and the high. The reason that I included the
low and the high is so that you can see a range.
You can see how how much of A discrepancy or how much of A
consensus there is with the estimates.
If there's a really low low and a really high high, that means
that analysts are guessing. They don't really know.
So the average is just the average of a bunch of guesses.
But then in some companies like Microsoft or in this case Sofi,
the average estimates pretty close to the high and low.
So there's a pretty close consensus between analyst
estimates. In this case, it looks like Sofi
was expected to earn around a loss of $0.01, so they're
expected to lose 1 cent in earnings per share.
When they reported earnings, they actually gained 2 cents per
share, so they beat their earnings per share by around
$0.03, which of course is a big beat.
Then if we look at the revenue here, we can flip over to
revenue again. We have the same thing.
The number of analysts, the average low and high, they're
supposed to earn between 538 million to 606,000,000.
That's a pretty big range. That's a range of $60 million.
So the analysts are guessing the average was around 562 and Sofi
reported 615,000,000. So Sofi beat not only the
average analyst estimate, they beat the high estimate, They
came in higher than the highest estimate from analysts.
So this was a massive beat by Sofi.
And if we look at that 615, that's really good.
The next one is going to be right around here.
So a big jump in revenue for this company.
If I was invested in Sofia, I'd be very satisfied with this
report. Next up before Tuesday morning,
we have MSCI. This company right here, I
consider a genuine compounding machine.
The reason why is because it's a huge indicee business of mostly
foreign markets. So the way that S&P Global
controls the Dow Jones and the S&P 500 indicee, they license
that, they get a little bit of money, they license it and get a
little bit of earnings every time you buy the S&P 500.
Well, that's something that MSCI does for all of these foreign
exchanges and they have these huge secular trends, these huge
tailwinds of growth into that category.
And while they're doing this, it's a very capital light
business. So if we look at the metrics,
their revenue continually grows as more and more money moves
towards investments, more and more ETFs are linked to the MSCI
indices. You can see the revenue growing
over time at a steady pace and you look at their expenses and
their expenses are very low. So it's a very good business
overall. Now if we look at the analyst
expectations for this company, we have earnings per share hair
the low of $3.14, the high of $3.53, average around $3.33 for
the quarter. If we look at that on the
earnings per share chart, $3.33 would put them, let's see this
right here. Last quarter was $3.27.
So right about there, this is where it would put their next
quarter, which if you look at this, this is a beautiful chart.
Their earnings per share just grows and grows and grows.
There's a couple quarters because of maybe taxes or one
time events where it goes down a little bit, but you see this
nice trend. This is a compounder, a company
that has predictable, reliable growing earnings per share.
They have good cost structure control over their expenses and
they're expected to grow right in line business as usual, just
like every other quarter. Now if we look at the revenue
expectations for this next quarter, we have a lowest
637,000,000, a high of 660,000,000 and the average
estimate of 651 million. So let's go ahead and take a
look at how that looks on the chart. 651 million, we'll put it
right above last quarter, which was 625 S Again, analysts are
expecting that the revenue in the earnings per share tick up
just a bit more than last quarter.
So they're not expecting huge explosive growth.
They're just expecting things to continue ticking up quarter
after quarter. And with the cost control this
company has, that leads to huge cash flows.
So as they grow, they have very reliable predictable cash flows.
They issue a lot of buybacks, which grow their free cash flow
per share at a faster speed. So this is one that I think is
going to do just fine. I'm not concerned about MSCIS
earnings. It might go up a little bit
above estimates, a little bit below.
Either way, I think they'll grow continually quarter after
quarter. They're going to gain a lot of
free cash flow per share. This is a company that I will
buy if it gets into a big enough dip.
So I'll be looking at the price of it, hoping that there's some
fear in it, some problems that it dips big and I might enter a
position into that one. Now after MSCI on Tuesday market
close, we have the big one, Microsoft reporting earnings.
I've called Microsoft the poster child for the perfect
fundamentals for a company. In my opinion, when you're
looking at companies and doing analysis, when I bring up
Microsoft here and I just take a look at all of their metrics,
it's nearly flawless. I can find a couple flaws, and
that's only with the amount of CapEx that Azure requires.
It's a little bit more capital intensive than most businesses,
but that's about it. I mean, you're being hyper
critical if you're trying to find flaws in Microsoft's
fundamentals. Every chart moves up and to the
right. They have far more cash than
they do debt. They pay dividends, they do
buybacks, They grow their earnings per share.
They're incredibly reliable. This is a company that has over
80% of revenues as recurring revenues, subscription revenue.
There's almost no flaws in the business.
I find it virtually, in fact, very close to the perfect type
of business. So of course, I've invested in
the business for a long period of time.
If we look at my holding care, I've held Microsoft around five
years. So my early buys on it did
particularly well, but that was with a little bit lower amounts
of capital. When Microsoft dipped down to
$220, I put a lot more into the company.
I bought another 200, sorry, 20 or $30,000 of the company.
So now I own $66,000 of this company.
We're up $23,000 on it. Let's go ahead and take a look
at what the expectations are going into Microsoft.
If we look at the analyst estimates, we'll start off with
the earnings per share. We have a low of $2.62 and a
high of $2.79. It's very close together.
These aren't that different of estimates.
That means that analysts have have a basic consensus on what
they're going to earn, around $2.74.
That is the average analyst estimate.
Now it's likely going to be a bit above that.
Microsoft typically beats on their earnings per share.
If you look at 10 recent quarters, they will have beat on
their earnings per share and around nine of them.
So they're very consistent, although not perfect at beating
in their earnings per share. And if I look at the average
estimate of $2.74, I'm going to say that they come in at $2.78.
We'll say that they come in there.
Let's take a look at what that would mean for the earnings per
share. We have right here, the long
history of Microsoft. Let's zoom into the past 10
years, $2.78 would put them right about here, so almost $3.
And then if we look 1234, that's a sizable gain over last year.
So the earnings per share are jumping year over year and you
can see a long trend of Microsoft gaining in their EPS
every single quarter. Now if we flip over and look at
the revenue of the company, the analysts are expecting between
60.1 billion and 61.2 billion. So we have a little bit of a
range there. They're expecting on average 61
billion dollars, $61 billion would be an all time high in
revenue for Microsoft. In fact, it would put them right
around here. So that'd be a pretty big jump.
That's going to be partly because of the acquisition, the
new revenue line coming in for the company.
So not all of that is organic, but still it's going to be a
record high for Microsoft. And as per usual, I think
they'll beat the revenue estimate maybe by a tiny bit,
but usually they come in just above it.
Now there are other aspects of Microsoft that are really
important, probably even more important than their earnings
per share and their revenue. That is the key indicators like
their Azure growth. Azure needs to grow by 29% this
quarter or more. If it comes in a little soft 28
percent 2726, you'll see some hesitancy with Microsoft.
If it comes in way disappointing 25%, something dramatic happens
like that, then Microsoft's going to sell off.
Investors won't be happy with that.
My expectations are that it's going to be very close to in
line. I believe it will be within 2%.
So I'm not hoping for any surprises here.
With my holding, I'm hoping that Microsoft reports its numbers
mostly in line with expectations.
No big surprises. Either way would be great.
Next up we have AMD. This is not a company that I've
ever held because I think it's too unpredictable, but this
one's finding some explosive growth this year.
Let's take a look at AM DS expectations.
If we go over to the earnings per share, they're expecting a
low estimate of $0.75 per share, a high estimate of a dollar one
and then the average is $0.83. This is a very big range of
earnings per share estimates so analysts don't have a huge
consensus here. When I bring up the earnings per
share chart, this is the reason that I don't own AMD.
You can just outline this and see the roller coaster ride of
their earnings per share over time.
Some investors like to time the lows and highs.
I know throughout history and studying that trying to time
these type of companies is near impossible to do consistently
and at some point you're going to be thrown off.
So my lack of confidence in timing the ebbs and flows of
this roller coaster ride keeps me out of the stock.
If we look at their latest quarter though, we zoom in, in
the past ten years they said $0.83 I believe if we take a
look at it again, yes, $0.83, that puts it right about here.
So we have earnings per share that are going to jump big time,
huge jump in earnings per share. This is going to be a very big
quarter for AMD, and analysts don't know for sure where this
is going to come in. Now my guess is they're going to
beat the analyst estimates. They're going to come in above,
closer to the high end of the estimates, So between $0.80 to a
dollar. I think they'll report that.
The reason why is because there's a ton of demand for what
AMD is creating. This company has a product that
a lot of companies want. Right now, it's not as good as
NVIDIA. They're not at that level.
But there's still massive demand for AMD.
I see lots of consumer demand for it as well.
They have pricing power right now.
They can determine in large part what their earnings are.
So I would be shocked if AMD came in as a huge
disappointment. Now moving on from Microsoft and
AMD, the Next up we have is Google, and I think that this is
going to be a very followed company.
A lot of investors are in Google and I believe for good reason.
It seems like an obvious pick. Why wouldn't you want to invest
in Google? And I agree.
I think it's one of those companies where it's an obvious
great company right before your eyes that you can invest in.
Now in My Portfolio, I have the passive income portfolio, which
is my main one. I also have the story fund, my
secondary portfolio of which it has around $200,000 of value,
$41,000 in gains. And my third largest position,
which is a large concentrated position is Google.
The reason that I invest in Google is because I think the
company is undervalued and has great growth potential and
because it has a lot of inefficiencies that can be
corrected. So this is already a great
company that can become a little bit greater if they correct a
lot of inefficiencies in the business itself.
So I think there's a lot of tailwinds and ways that Google
can earn more money. Now this has been a successful
holding so far. The holding size is $36,000, but
around 10,000 of that is gains. So a significant portion of this
holding already is gains. I'm really happy with how Google
has done so far, but this is one of those cases where even though
the stock has gone up, I don't think all the gains are behind
it. I think it has more room to run.
There's a lot more upside with this company.
Let's first go ahead and take a look at what the analysts are
expecting for this next quarter. We look right here.
We have a low expectation or low estimate of $1.42 and earnings
per share. A high estimate of $1.75 S
between $1.40 two $1.75 earnings are likely going to land
somewhere in there. The average is around $1.63.
Let's go ahead and take a look at the earnings per share and
see how this stacks up. I like looking at the long term
history so you can see trends over time with these companies
and get better. Context.
Last quarter was $1.55 S $1.63 would be right around here, just
a smidge over $1.60 there. That's what it would look like
and that would be an all time high earnings per share for
Google and that would be a good continual recovery from 2022.
So if they hit their analyst average estimate or coming above
that, that's going to be a very good story for Google.
Good continued growth overtime all time high earnings per
share, it's just going to be a really good thing for them.
So hopefully, Google will tell a story this quarter of the
company's fundamentals improving their earnings per share,
growing the revenue coming in line.
And then there's some other important aspects that I want to
see this quarter, primarily with Google.
The big three things that I'm looking for, I'm looking for
strong cloud growth, 2223% in line with estimates.
I want Google Cloud to do really well.
And in terms of the cloud business, I want them to have
more operating leverage with it, more profitability, higher
margins. I want the cloud to contribute
to the bottom line more. So hopefully they make it a
little bit better cost structure because the cloud business at
Google has been a big money sink for a long period of time, but
now it's finally earning money and contributing to the bottom
line. So I want the cloud business to
grow between 22 to 23%, the higher the better.
I want them to comment on AI, Gemini and show that their
business is not going to be disrupted by other people trying
to create large language models and have text boxes.
I think that they'll be able to illustrate that.
And then the final thing that I'm looking for personally with
Google is better cost control. If Google can show these three
things, strong cloud growth, great engagement with their
search business, that they're not being disrupted, that they
have the AI tech and they can show great cost control, I
believe this stock can do a lot better.
Again, it's already up 10% this year.
It's doing really well. It's having a huge recovery, but
the valuation of the company is not that demanding.
It trades out of 23, four PEA, 3% free cash flow yield.
That's not demanding in today's market.
Google just needs a good report and I think they'll do really
well Now. Next up again on Tuesday, we
have Starbucks and this is one that I like paying attention to
because Starbucks is a big indicator for how the entire
food and consumer industry is doing.
I get to see how these quick service restaurants are doing
and it's very indicative of McDonald's, Chipotle, Texas
Roadhouse. Not perfectly equal, but it's
going to be a nice weather vane for it.
Now if we look at Starbucks, let's go ahead and take a look
at some of the analyst estimates here.
For earnings per share, there's a low of $0.88, a high of a
dollar. One average is around $0.98.
If we bring up the earnings per share chart, we can see the long
history of Starbucks. 98 cents would be right around here, so a
little bit lower than the past two quarters, but up a lot since
four quarters ago. So year over year, that's going
to be a really big gain. We have revenue estimates of a
low of 9.5 billion, a high of 9.8 billion, the average of
9.71. So we're going to see a nice
step up in revenue to show that this company continues to
compound its revenue and grow quarter after quarter after
quarter. Now if I have to guess, I again
think that these type of companies are going to do well
and I've been beating the same drum for a long time.
I've been saying the same message.
I thought that last year food companies were going to do
really well. Starbucks, Chipotle, Texas
Roadhouse, you name it. Any top food company that has
great execution. I think there's lots of demand,
lots of people wanting to spend money on these companies.
They've made it a big part of the routine.
We have lots of young single adults or there's dual house
income, not as many children. There's more secular trends that
make it so that there's more affordability for Starbucks.
So I again think that these type of companies are going to do
really well now after Starbucks, we have another company
reporting earnings again on Tuesday, which is Canadian
Pacific. This again is going to be a very
busy day. Tuesday is such a huge day and I
know that Canadian Pacific's earnings report is going to be
overshadowed by Microsoft and Google, but it's still an
important company to me because I have a significant investment
in it. The thesis on Canadian Pacific
is very simple. It has a great management team.
I love the CEO of the company. He's done magic with Canadian
Pacific with their new merger. He has more territory, more room
to show what he's capable of. So Canadian Pacific's a great
asset with a great management team and I think that they can
create growth with those two things combined, I have
currently $33,000 holding in it and $700.00 of gains.
This has been my worst performing position over the
past two years. This is it.
Canadian Pacific is my worst investment over the past two
years. It's still in the green, so I
haven't lost money on it, which I'm happy about, but it has not
been a strikingly great performance.
It's been basically flat. I bought into the company in
2023. Now looking at Canadian Pacific,
I'll outline the problem here. The earnings for sure on the low
estimate is $0.78. On the high estimate it's $0.89
and the average is $0.85. Let's say that they earn $0.85
and see what this looks like. $0.85 is right here, so we have
between $1.80 there. It's going to be right there,
right in line of where they've been for the past two years.
So even if they meet the analyst estimates, this is nothing
special. And that's the problem with
these companies. They're not growing earnings per
share as fast as investors would like and Canadian Pacific needs
to accelerate this growth. Now if we look at the revenue
estimate, the low end is 2.59 billion, the high estimate is
2.75. The average estimates around 2.7
billion. When we look at that over the
history, this large jump in revenue right here is not
organic. That was from an acquisition and
they're expecting right now 2.75, which is right around
there. So a little bit of a bounce
back, but overall a huge growth year over year.
This is going to normalize over time as the acquisition works
through. So the story with Canadian
Pacific is them getting through this acquisition, cutting costs,
getting new clients, making magic out of this acquisition.
If they're not able to, if they just show quarter after quarter
that they're coming in under the estimates, they're not meeting
their growth expectations, they're not able to make magic
happen with this acquisition, then I am going to dump the
stock. Eventually.
I'll still make a gain from it, but I don't want to hold so much
capital in companies that are lagging behind.
I need an All Star team where every single holding in My
Portfolio is moving along quickly.
I don't want companies that are falling behind struggling with
their fundamentals. So we're going to see what
Canadian Pacific is. Is this a company struggling
with fundamentals, struggling to get the acquisition under
control or is it going to be an All Star player that really is
moving things along Now it's going to be tough to judge in
this one quarter, but this will be one more data point along
this story. So I'm going to be looking
closely at the developments happening with that company.
After Canadian Pacific, we have MasterCard.
I love this digital duopoly. I think they're two of the most
misunderstood companies by retail investors and two of the
best companies in the market. The reason that I think
MasterCard is so misunderstood by retail investors is because
retail investors think that MasterCard issues credit cards.
MasterCard does not issue credit cards.
Banks do. They think that MasterCard makes
a ton of money and they charge 3% to merchants.
MasterCard does not make a ton of money by charging 3% to
merchants. They have the minority take out
of the banks. So MasterCard is a digital
company that networks, banks, merchants and customers
together. They don't issue credit cards.
They never have. And they have a lot of other
services outside of that digital network where for example, they
do value add services like knowing your customer
cybersecurity, seeing trends in industries.
They have so much data that they can sell to other companies.
So they also have this nice reoccurring subscription
business, which is very attractive in a way.
It's similar to Moody's and S&P Global where they have one big
core business and then they leverage that to sell a lot of
unique data to companies. There's not a lot of companies
that have the same data as MasterCard, so that gives them a
unique competitive advantage in their subscription businesses.
So I like both parts of this company.
Mastercard's a little bit unique compared to Visa and that they
have more international growth, but both of them are fantastic.
I hold this company as a $70,000 position and I'm currently
$11,900 in the green and I'd feel fine buying more MasterCard
today. I really, really like this
company. We saw Visa's earnings.
If we look at Visa this year, it had a dip after earnings and
people thought, what do I think about this dip?
I thought it was a big nothing, Completely nothing.
Didn't matter. It was like a 1% dip when Visa
had been up 5% year to date. So it was nothing.
Visa's earnings were right in line of expectations.
Business as usual, nothing unexpected.
I expect the exact same for MasterCard.
Business as usual, right in line, barely above or below
analyst estimates, nothing unusual.
We can look at the earnings per share estimate to just get an
idea of what we're looking at here.
The average analyst is expecting around $3.
If we look at that, it's going to be again right around here.
So going up over time, a lot more than the past year, growing
as usual. This is what a compounding
machine does, this nice consistent earnings growth over
a long period of time. I love seeing that with these
companies In terms of the revenue, we can take a look at
that as well. The low estimate is 6.14.
The highest min is 6.47 and then the average is 6.27 billion.
We can look at how 6.27 billion looks.
That would put it just above here.
We have last quarter at 6.5 right there, two quarters ago,
6.27. So it's going to be similar to
two quarters ago right there. And of course year over year,
that's a nice gain year over year.
MasterCard is a truly wonderful business and I'm going to own
this company until they reveal a reason why they're no longer
wonderful. But I don't expect them to do
that in this earnings report. Now moving on from MasterCard,
we get into the next very busy earnings day of the week, which
is Thursday. This is like Tuesday.
It's going to be a chaotic, messy, busy day.
We have Apple's earnings report after market close.
Now, if you followed the channel for a while, you'll know that I
owned Apple. I've owned this company since
the very beginning. I bought my first share of Apple
in 2017. It was $200.
I bought a fractional share of the company and it's grown and
grown and grown. Over the past five years, Apple
has gained over 300% gains. From 2017, it's gained over
500%. So this company has been just
incredible. I mean it's blown away
expectations over and over again.
Over that same time period of me owning this company, Apple has
averaged a growth of free cash flow per share of above 15%, so
around double what the S&P 500 has.
SPY gross free cash flow per share on average around 8%.
Apple has been at 15%. Now I have a current holding
size of 55,026 thousand of that being gained.
So this has been again another big winner in the portfolio.
Now let's go ahead and take a look at Apple this quarter and
this year. I first want to look annually to
see how we believe Apple's going to close out the year.
If we look at the earnings per share, the average estimate for
the annual is $6.39. That's what analysts are
expecting, which if we look at the graph here, that means that
we believe 2023 will turn out to be right around here, just a
nice step up around 6% growth year over year.
That's not fast growth for Apple.
In fact, that's very slow. You can see historically they've
had much bigger jumps, especially in 2020.
Apple certainly had some pull forward in 2020 that they're
still dealing with, but it's nice to see that they're
resuming a little bit of growth this next quarter.
And then we can look at the revenue for Apple.
This is another issue for the company.
We look at the full year 2023 average estimate for the revenue
and we get 400.5 billion. So that's what the analysts are
expecting. When I look at this overall 400
billion, if they're able to do that, you can see that it's just
a slight step up from 2022. So not much growth, just a few
percentage of revenue growth. So the story of Apple in 2023 is
one of slowing growth, slow top line growth, slow bottom line,
slow revenue, slow earnings per share, slow free cash flow per
share. Tim Cook's doing everything he
can to continue growing this big beast of a company.
He's coming out with a new product, the Apple Vision Pro.
He's pushing a lot of services. He's doing a lot of buybacks to
grow your equity in the company. He's doing everything right.
So this is at no fault of his own.
This is no issue with Apple's management.
The big question for investors in Apple is can this company
continue to grow because evaluation is not going to
expand that much. So it's going to have to grow
its intrinsic value by revenue, free cash flow per share and by
the Moat improving. That's a question for me as
well. I've done really well with Apple
over the past five years, but I've not bought this company in
the past year because the valuation has gone up and the
growth has slown. And I have other companies in My
Portfolio that are growing much faster than Apple.
So I think this quarter will be fine.
My guess is that Apple likely beat their estimates, but I'm
looking at a longer trend here. I want to see Apple continue to
push services, continue to push growth if they're not able to
for another year and it looks like the company has reached
more of a mature slow growing phase and I'll likely start to
trim my position and find other holdings.
But I'm still hopeful that Apple can continue some growth.
We'll have to see. Next up after Apple, we have
Amazon. This is another big holding of
mine. I hold Amazon in the story fund
and it is a large position, 67,000 dollars, 9700 of that
being gains. So this one has been a winning
position, but it's been a bit volatile.
Amazon has been all over the place for the past three years.
I believe the company is undervalued and I'm valuing that
based off of projecting around $70 billion of free cash flow in
2024. So I think this year is going to
be a very big year for Amazon. Let's go ahead and take a look
at how they plan on closing out 2023.
If we look at the analyst estimates of the earnings per
share, you can see that there's not a huge consensus here.
The range of the earnings per share estimates are very wide,
the low end being $0.32, the high end being $0.87.
So a huge discrepancy, huge range in the an assessments with
an average around $0.62. Do these analysts know where
this earnings per share is going to lie?
No they don't, but odds are it's going to be somewhere between
this range. If we look at this on the chart,
this is massive growth in their earnings per share on a year
over year basis. So round right here is what the
analysts are expecting. 1234 quarters ago, their earnings per
share was basically nothing. So we're going to see a big
spike in EPS year over year. That's good, but that's not the
most important part of Amazon. The revenue I actually believe
is more important. We have revenue estimates on the
low end of 146 billion, On the high end 163 billion.
The average is 157 billion. This is going to be a big
quarter for Amazon, 157 billion. It's right around there.
So a nice tick up from all these other spikes year over year over
year. So Amazon is a fast growing
company. It's growing its top line, it's
growing its bottom line. But the most important thing is
it's growing the high margin portions of its business.
AWS needs to grow around 12% or more.
We see really soft AWS growth in the single digits.
That would be bad. If it's 10% or more, I think
investors will be OK with that. But we really want to see AWS
growth of 12% or more. Then we also want the ad revenue
to come in very strong. The ad revenue is another big
part of Amazon's business. I think if we see strong revenue
growth, strong AWS growth and strong advertising revenue,
we're going to see very good results from Amazon.
This is a company that I'm very bullish on this year.
Lots of free cash flow, lots of growth ahead of it, and I like
the valuation of it currently. But be warned, Amazon's a very
difficult company to predict quarter by quarter, so I'd not
bet on this one in the short term.
Now after Amazon, we have meta reporting at the same time.
So let's bring up meta and take a look at the anal assessments
for this one. Next quarter on the low end we
have $3.94, on the high end we have $5.22.
That's a big discrepancy as well.
So we have quite a range there. The average is around $4.69.
Let's take a look at how this stacks up on the chart. $4.69
would put it right around here at an all time high, which is
very good to see. So if they hit this average
analyst estimate or anywhere above that, that's really good
for the shareholders here. It shows not only recovery over
the past year, which is important because the earnings
tanked, but also just generally a nice trend of growing earnings
per share. So this still is a story of a
company that's growing earnings at a steady cadence.
Now on the revenue, we have a low estimate of 38 billion, a
high estimate of 39 and the average 38.6938 point 6-9 would
be an all new high for meta. It'd be right around here.
So we'd see strong organic top line growth and strong earnings
per share growth if they meet their metrics, which I believe
meta will. The company has been very
focused. Zuckerberg has been very focused
on appeasing Wall Street, making sure he's doing a good job for
them, while also doing the Metaverse and his own different
things he's wanting to do. He's done a good job balancing
both. For a while he was concerning
Wall Street by jumping super heavy into the Metaverse, and
that's what caused the stock to sell off.
I sold my position in meta, the huge majority of it, right here.
So I got out before the huge drop.
Then it came all the way down here, and Zuckerberg turned the
stock around by doing the Year of efficiency, by saying that
he's cutting costs, he was laying off a lot of employees.
He's going to focus more on Wall Street's demands of making the
company more profitable on a free cash flow basis, so on and
so forth. That was like music to the heirs
of investors. And the stock has been on a rip
since then. And this is very similar to what
investors want from Google. They want the year of
efficiency, better focus, better execution.
But Mark Zuckerberg was able to pull off the year of efficiency.
It worked super well. The stock is now at $400.00 per
share and I think it's still has some room to run if they post a
good earnings. The valuation is not capping the
progress of this company. It's at a higher valuation now,
but not crazy. I think it still has a decent
amount of room to run and that will wrap up the very busy week
ahead of us. So if you want to see how this
turns out and my thoughts on these companies earnings, I'm
going to be digging into the financials, the earnings report
going over my thoughts of whether or not the intrinsic
value has gone up or down, whether or not the Moat has
gotten bigger or weaker. I'll be doing that on many of
these companies. So if you want to see that post
earnings analysis, just make sure to subscribe to the channel
with the Bell notification on. That's all for this time.
See you in the next one.