Joseph Carlson — I'm Buying These Undervalued Stocks

S&P Global runs the credit-rating agency and the data/index business behind the famous S&P 500. The stock has fallen 26% from its high and is the cheapest it's been in five years — whether you measure it against profits (price-to-earnings) or against the cash it generates (price-to-free-cash-flow).

Carlson loves that for a business this dependable. Paying about 21× next year's expected earnings for this quality is, in his words, "almost unheard of." And unlike software companies, it isn't really threatened by AI — people will still need trusted credit ratings and market data. So he rates it a buy.

Mastercard runs one of the two giant card-payment networks that take a small cut of card transactions worldwide. It's 18% below its high and sits at the bottom of its five-year range on both earnings and cash-flow yield — meaning it's about as cheap as it's been in years.

Meanwhile the business is humming: revenue rising, earnings per share up in the high teens, and it keeps issuing more cards and widening its network. Cheap price plus a dominant, growing toll-booth business equals a buy for him.

Texas Roadhouse is the steakhouse chain. The stock is 15% off its high and trading around the middle of its normal valuation range — not dirt cheap, but reasonable.

He likes the setup: the brand and customer loyalty (its "moat") are intact, it keeps opening new restaurants organically, and a key cost — beef — is expected to fall as cattle grow larger and supply improves. A solid, growing business at a fair price, so he calls it a buy.

Microsoft is the Windows/Office and Azure-cloud giant, one of the four "hyperscalers" pouring huge sums into AI data centres. The stock has dropped 27% — a big dip — which puts its price-to-earnings at the very bottom of its range.

Its cash-flow yield only looks middling, but that's purely because so much cash is going straight into building AI infrastructure (capex) rather than being kept. Carlson's core argument is that this spending is more likely to pay off than the market fears, so on an earnings basis Microsoft is cheap — a buy.

Moody's is the other big credit-rating-and-data company — essentially S&P Global's twin. It's 17% below its high and cheap on both an earnings and a cash-flow basis.

His reason to buy is durability: the data and ratings Moody's sells are, in his words, "very difficult for Anthropic to disrupt" — i.e. AI isn't going to easily replace a trusted, regulated ratings franchise. A high-quality, hard-to-attack business on sale.

Meta runs Facebook, Instagram and WhatsApp and is another of his four hyperscalers. It's 27% off its high and cheap when measured against earnings.

It looks "expensive" on free-cash-flow yield, but only because nearly every dollar it earns is being plowed into AI computing power right now. Carlson sees that as a long-term positive, not a red flag — the underlying business is hugely profitable — so he rates it a buy.

Amazon is the online-retail and cloud-computing giant. It's only 14% off its high and, on a price-to-earnings basis, sits at the bottom of its five-year range. Reported cash flow looks weak right now, but that's because it's spending heavily to build for the future.

His pitch is that Amazon is "a less expensive SpaceX" — a single company with a stack of moonshot businesses: Leo (its Starlink-style satellite internet), Zoox robotaxis, a giant robotics operation, logistics, retail, advertising and Prime Video. So many ways to win that he sees the stock above $300 and calls it a buy — and the reason he'd rather own it than chase the actual SpaceX IPO.

Netflix is the video-streaming service, down a steep 38% from its recent peak. The backstory: Netflix had agreed to buy Warner Bros. Discovery, the deal fell through, and Netflix walked away with a $2.8 billion cash breakup fee. The stock jumped above $100, then drifted back down to about $82 "without any reason at all," in his view.

At roughly 26× earnings, growing in the mid-teens and still adding subscribers, he thinks it's "firing on all cylinders" and unfairly cheap — a buy.

Duolingo is the language-learning app. The stock has been crushed — 74% below its high, swinging between $88 and $489 over the year, and now at the absolute bottom of its valuation range. He still owns every share and has been buying more as it falls.

Critics dismiss it as "just an app," but he points out Spotify is "just an app" too and did fine. He believes a scaled, digital education platform is a big long-term market and wants to give the story years to play out, so it stays a high-conviction buy for him.

Uber is the ride-hailing and delivery company. He doesn't own it, but it's a "top consideration" on his watch list and he calls it a buy. It's 31% off its high.

Its price-to-earnings ratio looks high at a glance, but you have to compare it to its own history — Uber's P/E has ranged from about 12× to 18×, so it's actually near the cheap end while earnings grow quickly. Analyst Mark Mahaney has a price target roughly double today's level.

DoorDash is Uber's food-delivery rival — the one he thinks gets overlooked because big-city and Wall Street types default to Uber, while DoorDash dominates smaller towns and suburbs. Beyond delivering food well, it's expanding into groceries.

The stock is 46% off its high with a low historical price-to-earnings and price-to-cash-flow, and it still has room to grow more profitable as it scales. He rates it a buy, and notes Mark Mahaney has targets near double for both DoorDash and Uber.

Costco is the membership warehouse retailer and one of his big holdings — but here he is clear it's not a buy at today's price. It's sitting in the middle of its valuation range, and he thinks the stock price has run "way ahead of intrinsic value" (what the business is actually worth).

His view: the company needs to keep growing for a while so its real value catches up to the share price. A great business, but he'd pass on adding right now.

Alphabet (Google's parent) is his single largest position and what he calls "the standout winner." The catch: it's only 11% off its high after a massive run, and on a price-to-cash-flow basis it's "super expensive."

So while he's not selling, he wouldn't buy more at this price — he'd wait for a better entry point. He does add that he understands why Berkshire Hathaway is buying about $10 billion of it, so he doesn't think buying today is a mistake, just not the best moment.

ASML is the Dutch company that makes the ultra-advanced machines used to print the world's most cutting-edge chips — and it's his single biggest winner, up about $80,000 in gains as the stock ran from roughly $683 to about $1,800 in a year.

He stresses this is real, fundamentals-driven success, not just hype: demand is "insane," it's selling more machines and getting far more orders — including a new wave from memory makers, not just chip makers. But at only ~3% below its all-time high, he's content to keep holding rather than pile in more here.

SpaceX is Elon Musk's private rocket-and-satellite company, set to go public (IPO) on June 12. Carlson freely calls it "an excellent company" — this isn't a knock on the business.

His problem is the price. He says the valuation is too extreme and rests on too many assumptions and unknowns for him to get comfortable. Given the choice, he'd "rather just own Amazon, a company I understand a lot better" — which is why he's passing on the IPO.

This is his "fail of the week." ProShares plans to launch SPCF, an exchange-traded fund designed to deliver two times SpaceX's daily move, on June 12 — the very day SpaceX goes public. A "2× daily" fund roughly doubles whatever the stock does each day, up or down, which magnifies both gains and losses.

Carlson's objection: the SpaceX IPO is already one of the most volatile, unprecedented debuts ever, with no trading history to lean on. Doubling down on that with leverage, on day one, isn't investing — "it's simply gambling." He cites Buffett and Munger's warnings about the market turning into a casino, and jokes that if 2× is fine, why not 5× or 10×? To him it's a sign of where the market's speculation is heading.