Title: Our Shopping List — Companies we might add (Part I) Show: Compounding Quality (Substack, paid post — compoundingquality.net) Guest: Pieter Slegers / Team Compounding Quality (author; byline "Compounding Quality") Date: 2026-04-21 URL: https://www.compoundingquality.net/p/our-shopping-list-d54 Length: written post — no timestamps Note: Paid-subscriber post captured via Stephen's logged-in session. Body text verbatim; UI chrome removed. Fiscal.ai and investor-relations chart panels noted inline as [Image — ...]. Every candidate ends with an "At which price are we interested?" block giving a target multiple and the implied entry price against the current price; those numbers are transcribed verbatim. Hi Partner Last week, you got an extensive Portfolio Update. In case you missed it: Portfolio Update April 2026 (Part I) Portfolio Update April 2026 (Part II) For every company in the Portfolio, you found out about our conviction levels. Investing is an intellectual game that never stops. And it's also a game of opportunity costs. What do I mean by this? If you are invested in a company where you believe the future expected return equals 8% per year... ... And you find another one with an expected return of 13% per year... You should consider making the switch. That's exactly why we'll dive in some companies we're considering adding to the portfolio this week. Ready. Set. Go! Companies we're considering adding Let's now go over a list of companies we're considering for the Portfolio. 3i Group ($LON:III) How does the company make money? 3i Group is a Private Equity company/holding. They make money by buying stakes in private companies, growing their value, and selling them for a profit. Their largest stake? Action. Action is an European discount retailers that is growing at very attractive rates: [Image — Action revenue growth. Source: Company Presentation] Why is it an interesting company? Here's why 3i Group is interesting in 5 bullet points: Action exposure: ~90% of 3i's private equity returns come from Action. Action is the fastest-growing non-food discount retailer in Europe (Revenue CAGR since 2011: 26%) Exceptional unit economics: Action earns back the ~EUR 500k it spends to open a store in less than a year. This helps them pay for new stores on its own, opening about one new store every day. Massive runway left: Many places in Europe don't have many Action stores yet, and some countries (like the UK and Scandinavia) don't have any at all. Wide moat: Because Action is so big, it can sell things cheaper than others. People tell their friends about the low prices, so it grows without spending money on ads. This creates a simple cycle where being bigger helps it stay cheap and to keep growing. Strong management alignment: CEO Simon Borrows owns over GBP 585 million in 3i shares (865x his base salary), keeping incentives firmly aligned with shareholders. At which price are we interested? At the end of 2025, the NAV (intrinsic value) of 3i Group equaled 3,017 pence. The current stock price equals 2,859 pence. This means the company now trades at a small discount. Buying 3i Group at a discount compared to its NAV is never a bad idea if you ask me. [Image — 3i Group NAV history. Source: Company Presentation] Adyen ($ADYEN) How does the company make money? Adyen processes payments between merchants, card networks, and banks through a single unified platform, taking a small percentage or fee on every transaction. Its edge is cutting out intermediaries, offering a one-stop solution globally, which attracts large enterprise clients and drives high-margin volume growth. As you can see in this chart, Adyen simplifies the electronic payments value chain: [Image — the electronic payments value chain, simplified by Adyen] Why is it an interesting company? Here's why Adyen is interesting in 5 bullet points: Boring management in the best way: Management doesn't focus on M&A. The company grows organically and stays focused. Economies of scale: Every payment teaches Adyen to catch fraud and approve more transactions. More customers -> better data -> better results -> even more customers. Technological advantage: Rivals are combining old technology together. Adyen built everything clean from day one on one platform. Way more than just payments: Started as a payment processor, now quietly running companies' entire financial back office. Online + in-store in just one system: Big retailers hate juggling separate systems. Adyen handles both, so customers naturally spend more over time. At which price are we interested? Adyen now trades at its cheapest valuation level ever (a FWD PE of 25.3x). At a PE of 20.0x, the company could be a no-brainer. This means we're willing to pay EUR 765 for Adyen (current stock price: EUR 970). [Image — Adyen forward PE history. Source: Fiscal.ai] Alphabet ($GOOG) How does the company make money? Alphabet dominates digital advertising through Google Search and YouTube. Advertisers bid for placement in an auction model. Beyond ads, it earns from Google Cloud, the Play Store, and hardware, though advertising remains roughly 75% of revenue. [Image — Alphabet revenue mix. Source: Company Presentation] Why is it an interesting company? Dominant core business (Search + Ads): Alphabet's revenue engine is still built around search advertising, where it effectively forms a duopoly with Meta Platforms in digital ads. Wide economic moat: Its leadership is reinforced by deep structural advantages, strong network effects, a globally trusted brand, unmatched data scale, and meaningful switching costs. Self-reinforcing ecosystem: More users generate more data, which improves ad targeting and search quality, which in turn attracts more users and advertisers. Strong capital allocation: Alphabet is a cash flow machine. Multiple growth engines: Think about AI, YouTube, and "other bets". They are diversifying beyond search. At which price are we interested? Alphabet is an amazing company, but it also did really well recently. The stock is up +123% in the past year. As a result, the valuation looks rather expensive. Alphabet now trades at a Forward PE of 28.9x. I would love to buy Alphabet at a Fwd PE of 18x. This would mean at a stock price of $210 (current stock price: $336.0) [Image — Alphabet forward PE, 2017-2026: Max 34.56, Avg 24.06, Min 15.53, current 29.25. Source: Fiscal.ai] ASML ($ASML) How does the company make money? ASML has a monopoly in producing chip machines (EUV lithography machines). They are essential for producing the world's most advanced chips. Every major chipmaker in the world, from TSMC to Intel, buys its machines from ASML. [Image — ASML product line. Source: Company Presentation] Why is it an interesting company? The only company that makes the machines that make chips: No ASML means no iPhones, no AI, no nothing. They have 90% market share and literally zero real competitors. Impossible to copy, even for entire countries: One of their machines weighs as much as two blue whales and takes decades of knowledge to build. China has been trying to replicate it for years. They're nowhere close. Once you're a customer, you're a customer forever: Chip factories can't just switch suppliers. It would cost billions. So ASML collects service fees for 20-30 years after every single sale. AI is a money printer for them: More AI -> more chips needed -> more factories built -> more ASML machines ordered. Every dollar spent on AI eventually flows back to ASML. They bet big and won bigger: ASML spent over a decade losing money on a technology nobody was sure would work. It worked and ASML is now reaping the benefits from this. At which price are we interested? ASML is an amazing company. They currently trade at a Forward PE of 36.8x. This is rather expensive from a historical point of view. The average Forward PE of the past 10 years equals 32.0x. Personally, I'd consider owning ASML at 25x earnings. This means we would become interested at a stock price of EUR 745 (current stock price: EUR 1,245). Now let's dive into the three final companies. Cintas ($CTAS) How does the company make money? Cintas rents, cleans, and delivers uniforms to businesses on long-term recurring contracts. This gives them a highly predictable revenue stream. It also cross-sells fire safety, first aid, and hygiene services to the same customer base, deepening relationships and margins. [Image — Cintas segments. Source: Company Presentation] Why is it an interesting company? The boring business that never stops growing: Cintas delivers uniforms, mops, and first aid kits to businesses. Sounds like the dullest job ever... but they've been growing earnings every year for decades without missing a beat. The bigger they get, the cheaper it gets: Adding one new customer to an existing delivery route costs almost nothing extra. It means Cintas gets more efficient every year while competitors fall further behind. Nobody ever leaves: Uniforms cost pocket change per week, but switching suppliers is a massive headache. Cintas keeps over 95% of its clients every single year. They've barely scratched the surface: Cintas serves 1 million businesses today. There are 16 million potential customers out there, most of them still doing this themselves. Run by people who actually get it: The CEO started as a truck driver 30 years ago. The founding family still owns 14% of the company. The people closest to customers make the calls, not suits in a boardroom. At which price are we interested? Cintas is a company I would love to own at the right price. The company now trades at 33.8x earnings. If we could buy this company at 25x earnings, it could be a steal. This means we're interested at a price of $132 (current stock price: $179). Copart ($CPRT) How does the company make money? Copart operates online salvage vehicle auctions. You could see them as 'the eBay for written-off cars'. Their main clients are insurance companies. Copart earns fees from both sellers and buyers. They benefit from a massive physical lot network. This global buyer base is difficult for competitors to replicate. [Image — Copart operations. Source: Company Presentation] Why is it an interesting company? The middleman insurance companies can't live without: When your car is total loss, Copart handles everything. Insurers have zero interest in doing this themselves and no reason to switch. Land is a moat you can't fake: Copart owns 19,000 acres across the US. When a hurricane wipes out 90,000 cars overnight, you either have the land or you don't. Most competitors lease theirs. They simply can't compete. The bigger they get, the harder they are to beat: More sellers attract more buyers, which drives up prices, which attracts even more sellers. Copart has 1 million registered buyers worldwide. Their closest competitor has 150,000. Totaled cars are a forever-growing business: Modern cars are packed with sensors and software. Repair costs keep climbing, so insurers total more cars instead of fixing them. This trend has been running for 40 years and isn't stopping. Short-term noise, long-term story untouched: Volumes are down for Copart right now. But selling prices still grew 7% last quarter. The moat is very much alive. At which price are we interested? Copart is having a hard time right now. The stock halved from its peak. The company now trades at a Forward PE of 21.1x and they have a net cash position equal to 15% (!) of their current market capitalization. If we exclude the cash, Copart trades at a Forward PE of just 17.9x. The big question is whether Copart can keep growing at attractive rates going forward. Buying Copart at 18x earnings (including cash) is a no-brainer if you ask me. This would imply a stock price of $28.7 (current stock price: $33.8). Fair Isaac ($FICO) How does the company make money? Fair Isaac is very well-known company in the United States. Everyone knows the FICO credit score. It's the standard used by lenders across the US, and it charges fees each time a score is pulled. It also sells analytics and decision-management software to banks and insurers, with the scoring business being an exceptionally high-margin near-monopoly. [Image — FICO business overview. Source: Company Presentation] Why is it an interesting company? FICO is a monopoly: Every time a bank checks your credit score, FICO gets paid. They control 95% of the market. They raise prices whenever they want. And they do: Mortgage score revenue jumped 52% last year. Not because more homes were sold, but because FICO just charged more. That's what real pricing power looks like. The business is basically a money printer: For every $100 they earn, $30 is pure profit. Few companies are so profitable as FICO. The best years may still be ahead: Revenue is expected to grow 16% per year for the next 5 years. The more people use it, the more everyone has to use it: Banks, regulators, investors, and consumers all depend on FICO scores. At which price are we interested? FICO is an amazing business. The company now trades near its cheapest valuation level of the past 10 years (Forward PE: 23.8x). However, we should take the high level of stock-based compensation into account. Stock-Based Compensation is equal to 25% (!) of FICO's Net Income. If we adjust for his, FICO trades at a FWD PE of 29.6x. We would love to own FICO at a FWD PE of 25.0x (after SBC). This implies a stock price of $901 (current stock price: $1,058). Conclusion Here are the companies we discussed today: [Image — summary card of the seven candidates: 3i Group, Adyen, Alphabet, ASML, Cintas, Copart, Fair Isaac] See you on Thursday for Part 2! Everything in life compounds Team Compounding Quality Book Order your copy of The Art of Quality Investing here Used sources Interactive Brokers: Portfolio data and executing all transactions Fiscal.ai: Financial data Disclaimer As a reader of Compounding Quality, you agree with our disclaimer.