Title: Buy-Hold-Sell List: June 2026 Show: Compounding Quality (Substack, paid post — compoundingquality.net) Guest: Pieter Slegers / Team Compounding Quality (author; signed "Team Compounding Quality") Date: 2026-06-18 URL: https://www.compoundingquality.net/p/buy-hold-sell-list-june-2026 Length: written post — no timestamps Note: Paid-subscriber post captured via Stephen's logged-in session. Body text verbatim; UI chrome removed. Charts noted inline as [Image — ...]. The watchlist spreadsheets are published as images and are transcribed below as [Table image — ...] blocks: the ten worst and ten best performers, the full 53-stock BUY list with every model column, the three "most undervalued" screens, and the portfolio conviction/valuation sheet. Figures are read from those images; where a value was not legible it is marked (unclear) rather than guessed.
Last week, SpaceX went public.
It was the biggest IPO in history. All eyes were on it.
But while the market chases the hype, we're focused on something different: great companies that quietly create more value year after year.
Let's dive into our Buy-Hold-Sell list today.
Mr. Market is a manic-depressive.
SpaceX went public at an IPO price of $135 per share and debuted on the stock market at $150 per share.
Today SpaceX is trading at $191 per share.
This means Mr. Market values SpaceX at $2.5 trillion (!)
This is even higher than the IPO valuation of $1.75 trillion, almost a trillion dollar market cap gain in less than a week (!)
Here are the facts:
Its the largest IPO ever
The sixth-largest company in the US, above Tesla
More valuable than companies like JP Morgan, Visa, and Walmart
[Image — SpaceX listing. Source: Investing.com]
While that looks incredible, let's look deeper for a moment.
At a valuation level of $1.75 trillion, SpaceX trades at 90x (!) its revenue.
That is higher than Palantir (75x revenue)
Higher than Nvidia (20x)
Higher than Tesla (16x)
Investment banks called it the most exciting IPO in history.
No wonder they say that.
They are making over $500 million (!) just in fees from this IPO.
But this isn't the first time we've seen something this crazy.
Let's go back to 1999.
Do you remember Pets.com?
[Image — Pets.com]
Here's Pets.com in a nutshell:
Pets.com was an online retailer during the dot-com bubble
They sold pet food, pet toys (they heavily advertised puppet mascot),..
The online boom was supposed to increase its revenue drastically
Pets.com raised $82.5 million for its IPO in 2000
The stock peaked at $14
Nine months later it traded at $0.19, and the company filed for bankruptcy
SpaceX is not exactly like Pets.com.
It brings together some of the world's most powerful companies:
SpaceX (a rocket company)
Starlink (satellite internet service company)
X and xAI (Social Media company and AI LLM company)
But here's the thing.
SpaceX is still loss-making.
In 2025 SpaceX generated $18.7 billion in revenue and made a loss of $4.9 billion.
The AI side is even more aggressive.
xAI burned through $7.7 billion in just the first three months of 2026, posting a $2.5 billion operating loss.
[Image — SpaceX financials. Source: SpaceX SEC filings]
Here's the quick valuation math on SpaceX:
To justify its price at a more reasonable 20x sales multiple, SpaceX would need to grow revenue to at least $88 billion.
That's almost 5x its current revenue.
Even at a fast 30% growth rate every year, that milestone is still 6 years away.
And to justify the price on profits instead, at a 35x P/E, SpaceX would need around $50 billion in net profit.
Even if we take the most optimistic scenario, SpaceX would need at least half a decade to justify it's current valuation level.
And this is under the assumption that nothing goes wrong.
Morningstar thinks SpaceX is worth just $780 billion.
That's less than 50% of the current market cap:
[Image — Morningstar fair value. Source: Reuters]
Even in peer comparison terms, SpaceX's IPO valuation was on Elon Musk's hype.
[Image — peer comparison. Source: Argus Research]
In general, you should stay away from IPOs.
IPO... It's Probably Overpriced.
Just look at these past IPOs:
[Image — past IPO performance]
Quality is Underperforming
While SpaceX is being valued at 90x revenue, quality stocks are struggling.
They are trading at some of their cheapest valuation levels ever.
As a result, the setup looks great for future outperformance.
The market is acting more and more like a casino.
Investors look more like gamblers as a result.
The most volatile stocks are hitting all-time highs compared to the index, while the least volatile ones are at all-time lows.
As Warren Buffett said:
"A bull market is like sex. It feels best just before it ends."
[Image — Buffett quote: "Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient."]
This trend can't continue forever.
What's going on today reminds me of the Dot.com bubble.
Newspapers were asking themselves whether Warren Buffett lost his magic touch:
[Image — 1999-2000 press clippings: "Has Warren Buffett lost his touch?", "Buffett's oracle status questioned", "Berkshire Hathaway's slump casts shadow on Buffett legend", "Former high-fliers take a Buffetting"]
Right now, we need to be extra careful about which stocks we buy.
History doesn't repeat itself. But it often rhymes.
In the late 1990s, everyone was piling into tech stocks.
Everyone except Warren Buffett.
He refused to join in, even though it looked like he was running behind and missing out.
And the numbers were brutal. Between mid-1998 and early 2000, the Nasdaq surged 145%. Berkshire Hathaway? It fell 44%.
That's a massive underperformance.
The press smelled blood. Barron's even ran a cover story: "What's Wrong, Warren?"
You can guess what happened next.
The bubble burst.
Between 2000 and 2002, the S&P 500 lost almost half its value.
And Buffett? His Berkshire Hathaway gained 65% (!) over that exact same period.
The lesson? Patience feels painful. But it pays off.
[Image — Berkshire versus the S&P 500. Source: Fiscal.ai]
In times like today, we need to ask ourselves 4 simple question about the companies we own:
Are valuations reasonable?
Has anything structurally changed?
Do the fundamentals remain strong?
Do our companies still have durable moats?
As long as the answers to those questions is 'yes', the right thing to do is usually nothing.
We feel like we're very well positioned right now.
Just look at the fundamentals of Our Portfolio:
[Table image — Our Portfolio versus the S&P 500. Balance Sheet — Interest Coverage: Portfolio 49.8x vs S&P 500 14.6x; Net Debt/EBITDA 1.0x vs 1.8x. Capital Intensity — CAPEX/Revenue 3.5% vs 19.2%; CAPEX/OCF 23.5% vs 34.5%. Capital Allocation — ROE 32.5% vs 18.0%; ROIC 18.3% vs 14.5%. Profitability — Gross Margin 63.4% vs 34.4%; Profit Margin 27.7% vs 13.4%; FCF/Net Income 195.8% vs 70-90%. Historical Growth — Revenue 5-year CAGR 17.2% vs 11.3%; EPS 5-year CAGR 17.4% vs 12.0%. Outlook — Revenue 2-year CAGR 7.0% vs 5.0%; Earnings Growth Model 14.8% vs 8.0%. Valuation — Forward P/E 18.3x vs 31.8x; PEG 1.2x vs 2.1x. Value Creation — CAGR 3-years 0.0% vs 23.6%; CAGR 5-years 4.6% vs 14.0%; CAGR since IPO 19.2% vs 9-11%.]
We own better companies that are cheaper than the index.
Update Buy-Hold-Sell List: June 2026
Let's now update our Buy-Hold-Sell List.
Worst performers
Here are the 10 worst performers on our watchlist so far this year:
[Table image — 10 worst performers YTD (Company / Ticker / YTD / 5-year CAGR / 10-year CAGR): Kelly Partners Group Holdings KPG -52.3% / 9.4% / 12.8% EPAM Systems EPAM -51.1% / -27.4% / 2.7% CoStar Group CSGP -48.4% / -16.3% / 4.8% lululemon athletica LULU -45.7% / -19.2% / 5.3% Goosehead Insurance GSHD -45.3% / -15.1% / 11.6% Adyen ADYEN -41.5% / -15.3% / 7.6% Hamilton Lane HLNE -41.1% / -0.3% / 17.5% Zoetis ZTS -37.0% / -13.8% / 5.1% MarketAxess MKTX -34.5% / -22.6% / -1.9% Dunelm Group DNLM -31.6% / -5.1% / -2.1%]
Best performers
The 10 best performers look as follows:
[Table image — 10 best performers YTD (Company / Ticker / YTD / 5-year CAGR / 10-year CAGR): Fortinet FTNT 83.7% / 26.2% / 35.4% LEM Holding LEHN 61.4% / -22.3% / -6.3% Keysight Technologies KEYS 58.5% / 17.2% / 26.4% Old Dominion Freight Line ODFL 51.2% / 14.2% / 27.7% ASML Holding ASML 48.3% / 22.4% / 32.3% HMS Networks HMS 35.0% / 9.9% / 26.3% The RMR Group RMR 34.2% / -2.9% / -3.8% W.W. Grainger GWW 29.5% / 24.4% / 19.0% Monarch Casino & Resort MCRI 27.6% / 14.2% / 19.0% Sanlorenzo SL 25.7% / 10.5% / 14.3%]
Changes to the Buy-Hold-Sell list
Now let's look into the changes on our watchlist.
Four companies went from Hold to Buy:
Medpace Holdings ($MEDP): Global clinical research organization
Microsoft ($MSFT): Global technology holding company
TransDigm Group ($TDG): Aerospace components company
Berkshire Hathaway ($BRK): Diversified holding company
One company went from Buy to Hold:
Alphabet ($GOOGL): Technology and internet services company
One company went from Sell to Hold:
Hermès ($RMS): Luxury goods company
One company went from Hold to Sell:
Judges Scientific ($JDG): Scientific instruments company
We sold Judges Scientific because we see better opportunities elsewhere
Currently there are 53 stocks on 'Buy'.
This number has never been higher.
You can download the entire Buy-Hold-Sell List here: Buy-Hold-Sell
53 Stocks to Buy
You can see all the companies that are on 'Buy' right now here.
[Table image — the full 53-stock BUY list. Columns: Company / Ticker / Advice / Earnings Growth Model (EPS growth, dividend yield, FWD PE, fair exit PE, expected return, fair value, stock price, over/undervaluation) / Forward PE (current, 5-year average, over/undervaluation) / Reverse DCF (required growth, expected growth, difference) / Stock return (YTD, 5-year CAGR, 10-year CAGR). All 53 carry the advice BUY.
Adobe ADBE — EPS growth 12.3%, FWD PE 10.8, fair exit PE 20.0, ER 20.8%, fair value 604.7 vs price 251.4 = 58.4% undervalued; fwd PE 10.8 vs 30.9 avg = 65.0% under; RDCF -0.1% required vs 12.3% expected (+12.4pp); YTD -25.1%, 5y -13.3%, 10y 9.7% Adyen ADYEN — 15.0%, 21.2, 25.0, ER 16.8%, FV 1927.8 vs 817.4 = 57.6%; 21.2 vs 64.3 = 67.0%; RDCF 10.8% vs 15.0% (+4.2pp); YTD -41.5%, 5y -15.3%, 10y 7.6% Alarm.com ALRM — 6.9%, 15.9, 25.0, ER 12.6%, FV 54.5 vs 45.4 = 16.7%; 15.9 vs 33.3 = 52.3%; RDCF 3.3% vs 6.9% (+3.6pp); YTD -11.4%, 5y -10.8%, 10y 7.5% Ameriprise Financial AMP — 9.8%, 11.0, 11.7, ER 11.9%, FV 555.9 vs 454.7 = 18.2%; 11.0 vs 11.7 = 6.0%; RDCF 1.1% vs 9.8% (+8.7pp); YTD -7.9%, 5y 13.1%, 10y 16.1% Automatic Data Processing ADP — 6.0%, 17.3, 25.0, ER 13.4%, FV 302.8 vs 232.0 = 23.4%; 17.3 vs 27.9 = 38.0%; RDCF 6.4% vs 6.0% (-0.4pp); YTD -8.8%, 5y 5.5%, 10y 10.2% Berkshire Hathaway BRK.A — 3.0%, 23.3, 20.0, ER 1.6%, FV 370,386.5 vs 733,550.0 = -98.1% (i.e. overvalued on this model); 23.3 vs 22.5 = -3.6%; RDCF 7.1% vs 3.0% (-4.1pp); YTD -1.6%, 5y 11.0%, 10y 13.2% Brookfield Corporation BN — 12.0%, 46.0, 68.0, ER 17.4%, FV 124.1 vs 62.1 = 49.9%; 46.0 vs 45.0 = -2.2%; RDCF 7.4% vs 12.0% (+4.6pp); YTD -3.0%, 5y 14.8%, 10y 12.0% Brown & Brown BRO — 10.2%, 14.6, 20.0, ER 15.0%, FV 93.8 vs 58.9 = 37.2%; 14.6 vs 24.7 = 40.9%; RDCF 5.8% vs 10.2% (+4.4pp); YTD -24.2%, 5y 3.3%, 10y 12.5% Columbia Sportswear COLM — 8.0%, 17.4, 19.4, ER 11.0%, FV 70.2 vs 64.2 = 8.5%; 17.4 vs 19.4 = 10.3%; RDCF 3.2% vs 8.0% (+4.8pp); YTD 14.6%, 5y -7.0%, 10y 1.3% Computer Modelling Group CMG — 5.0%, 13.6, 20.0, ER 10.7%, FV 3.9 vs 3.8 = 4.8%; 13.6 vs 25.4 = 46.5%; RDCF -0.6% vs 5.0% (+5.6pp); YTD -28.6%, 5y -4.2%, 10y -9.6% Constellation Software CSU — 15.0%, 15.8, 20.0, ER 17.9%, FV 7830.5 vs 2969.3 = 62.1%; 15.8 vs 31.5 = 49.8%; RDCF 10.0% vs 15.0% (+5.0pp); YTD -8.3%, 5y 11.7%, 10y 18.6% Copart CPRT — 11.9%, 20.9, 25.0, ER 13.9%, FV 45.7 vs 31.0 = 32.3%; 20.9 vs 30.7 = 31.9%; RDCF 10.8% vs 11.9% (+1.1pp); YTD -17.8%, 5y 0.0%, 10y 17.5% Deckers Outdoor DECK — 7.0%, 14.0, 21.3, ER 12.2%, FV 126.5 vs 108.1 = 14.6%; 14.0 vs 21.3 = 34.3%; RDCF 4.6% vs 7.0% (+2.4pp); YTD 1.2%, 5y 14.8%, 10y 28.1% Dino Polska DNP — 15.0%, 17.7, 20.0, ER 16.3%, FV 66.8 vs 29.6 = 55.8%; 17.7 vs 24.9 = 28.9%; RDCF 14.1% vs 15.0% (+0.9pp); YTD -27.9%, 5y 0.6%, 10y 25.3% Domino's Pizza DPZ — 9.4%, 19.1, 25.0, ER 15.0%, FV 513.7 vs 314.0 = 38.9%; 19.1 vs 27.5 = 30.5%; RDCF 7.5% vs 9.4% (+1.9pp); YTD -26.3%, 5y -5.2%, 10y 9.6% Esquire Financial ESQ — 13.5%, 16.0, 15.0, ER 13.6%, FV 174.7 vs 108.1 = 38.1%; 16.0 vs 11.9 = -34.5%; RDCF 4.4% vs 13.5% (+9.1pp); YTD 6.5%, 5y 35.3%, 10y 24.4% Evolution AB EVO — 5.7%, 11.0, 15.0, ER 14.3%, FV 1022.9 vs 697.6 = 31.8%; 11.0 vs 15.0 = 26.7%; RDCF -2.9% vs 5.7% (+8.6pp); YTD 11.8%, 5y -13.0%, 10y 28.3% Fairfax Financial FFH — 11.0%, 9.1, 8.0, ER 10.7%, FV 2410.2 vs 2220.7 = 7.9%; 9.1 vs 8.0 = -13.8%; RDCF 11.0% vs 11.0% (0.0pp); YTD -14.8%, 5y 33.4%, 10y 13.0% Fair Isaac FICO — 10.0%, 22.7, 25.0, ER 11.0%, FV 1252.6 vs 1137.3 = 9.2%; 22.7 vs 40.9 = 44.5%; RDCF 17.0% vs 10.0% (-7.0pp); YTD -30.8%, 5y 18.6%, 10y 25.9% Fortinet FTNT — 12.0%, 28.9, 25.0, ER 10.7%, FV 156.4 vs 144.7 = 7.5%; 28.9 vs 42.7 = 32.3%; RDCF 12.0% vs 12.0% (0.0pp); YTD 83.7%, 5y 26.2%, 10y 35.4% Gartner IT — 8.0%, 11.4, 25.0, ER 19.9%, FV 299.7 vs 164.0 = 45.3%; 11.4 vs 33.4 = 65.9%; RDCF -0.8% vs 8.0% (+8.8pp); YTD -31.6%, 5y -6.8%, 10y 4.7% Hamilton Lane HLNE — 3.4%, 15.1, 25.0, ER 12.9%, FV 97.2 vs 80.5 = 17.3%; 15.1 vs 25.5 = 40.8%; RDCF 6.6% vs 3.4% (-3.2pp); YTD -41.1%, 5y -0.3%, 10y 17.5% Intercontinental Exchange ICE — 12.0%, 19.5, 21.9, ER 14.7%, FV 244.5 vs 141.5 = 42.1%; 19.5 vs 21.9 = 11.0%; RDCF 8.8% vs 12.0% (+3.2pp); YTD -11.6%, 5y 6.4%, 10y 10.3% Interparfums IPAR — 10.0%, 18.6, 20.0, ER 14.4%, FV 153.3 vs 91.3 = 40.5%; 18.6 vs 26.3 = 29.3%; RDCF 4.3% vs 10.0% (+5.7pp); YTD 6.8%, 5y 5.7%, 10y 11.6% Kainos Group KNOS — 11.9%, 17.1, 25.0, ER 19.9%, FV 26.4 vs 8.5 = 67.9%; 17.1 vs 28.7 = 40.4%; RDCF 10.1% vs 11.9% (+1.8pp); YTD -14.4%, 5y -7.8%, 10y 16.7% Kelly Partners Group KPG — 12.0%, 18.1, 25.0, ER 15.8%, FV 6.9 vs 4.0 = 42.1%; 18.1 vs 29.3 = 38.2%; RDCF 10.0% vs 12.0% (+2.0pp); YTD -52.3%, 5y 9.4%, 10y 12.8% Kinsale Capital KNSL — 11.0%, 17.2, 25.0, ER 12.9%, FV 409.1 vs 306.1 = 25.2%; 17.2 vs 28.6 = 39.9%; RDCF 5.8% vs 11.0% (+5.2pp); YTD -22.0%, 5y 13.8%, 10y 33.0% KKR & Co. KKR — 9.8%, 16.2, 17.9, ER 11.6%, FV 109.2 vs 93.4 = 14.5%; 16.2 vs 17.9 = 9.5%; RDCF 1.2% vs 9.8% (+8.6pp); YTD -27.6%, 5y 12.3%, 10y 20.8% lululemon athletica LULU — 7.4%, 11.2, 25.0, ER 19.7%, FV 202.4 vs 114.2 = 43.6%; 11.2 vs 33.1 = 66.2%; RDCF 3.0% vs 7.4% (+4.4pp); YTD -45.7%, 5y -19.2%, 10y 5.3% Markel MKL — 12.0%, 18.7, 17.6, ER 11.4%, FV 2139.6 vs 1818.7 = 15.0%; 18.7 vs 17.6 = -6.2%; RDCF 5.7% vs 12.0% (+6.3pp); YTD -14.7%, 5y 8.5%, 10y 6.8% Mastercard MA — 15.0%, 26.8, 25.0, ER 15.0%, FV 1065.3 vs 491.1 = 53.9%; 26.8 vs 32.6 = 17.8%; RDCF 12.9% vs 15.0% (+2.1pp); YTD -13.0%, 5y 6.7%, 10y 17.6% Medpace MEDP — 12.0%, 29.7, 25.0, ER 10.4%, FV 478 vs 454.3 = 5.0%; 29.7 vs 29.4 = -1.0%; RDCF 9.9% vs 12.0% (+2.1pp); YTD -20.4%, 5y 21.6%, 10y 32.8% MercadoLibre MELI — 15.0%, 36.3, 25.0, ER 11.9%, FV 2214.6 vs 1607.8 = 27.4%; 36.3 vs 48.4 = 25.0%; RDCF 13.1% vs 15.0% (+1.9pp); YTD -18.8%, 5y 3.9%, 10y 27.7% Microsoft MSFT — 15.0%, 24.5, 25.0, ER 16.1%, FV 1037 vs 416.7 = 59.8%; 24.5 vs 30.1 = 18.6%; RDCF 10.7% vs 15.0% (+4.3pp); YTD -12.4%, 5y 11.2%, 10y 23.0% Mips AB MIPS — 15.0%, 23.8, 25.0, ER 16.5%, FV 622.9 vs 237.2 = 61.9%; 23.8 vs 59.6 = 60.1%; RDCF 15.7% vs 15.0% (-0.7pp); YTD -30.2%, 5y -17.6%, 10y 18.0% Moody's MCO — 11.5%, 27.6, 25.0, ER 11.5%, FV 537.9 vs 451.8 = 16.1%; 27.6 vs 32.7 = 15.6%; RDCF 13.3% vs 11.5% (-1.8pp); YTD -10.2%, 5y 6.9%, 10y 16.1% MSCI MSCI — 12.5%, 29.2, 25.0, ER 12.4%, FV 849.9 vs 615.5 = 27.6%; 29.2 vs 39.6 = 26.3%; RDCF 13.7% vs 12.5% (-1.2pp); YTD 8.9%, 5y 7.0%, 10y 22.9% Napco Security NSSC — 12.9%, 30.5, 25.0, ER 12.8%, FV 53.1 vs 35.0 = 34.1%; 30.5 vs 29.0 = -5.2%; RDCF 12.9% vs 12.9% (0.0pp); YTD -15.4%, 5y 17.1%, 10y 26.8% Novo Nordisk NOVO B — 8.6%, 12.3, 20.0, ER 19.0%, FV 632.3 vs 283.9 = 55.1%; 12.3 vs 27.8 = 55.8%; RDCF 10.0% vs 8.6% (-1.4pp); YTD -14.0%, 5y 4.9%, 10y 4.2% Pool Corporation POOL — 8.1%, 21.2, 25.0, ER 12.6%, FV 238.4 vs 185.5 = 22.2%; 21.2 vs 27.3 = 22.3%; RDCF 8.3% vs 8.1% (-0.2pp); YTD -19.9%, 5y -14.7%, 10y 7.2% Qualys QLYS — 4.4%, 12.1, 25.0, ER 15.0%, FV 145.6 vs 109.9 = 24.5%; 12.1 vs 30.1 = 59.8%; RDCF 5.2% vs 4.4% (-0.8pp); YTD -16.2%, 5y 2.0%, 10y 13.0% RH RH — 11.0%, 25.0, 25.0, ER 11.0%, FV 162.9 vs 146.6 = 10.0%; 25.0 vs 25.8 = 3.1%; RDCF -0.5% vs 11.0% (+11.5pp); YTD -25.0%, 5y -25.3%, 10y 15.1% Sanlorenzo SL — 6.0%, 10.9, 14.2, ER 11.7%, FV 44 vs 38.2 = 13.3%; 10.9 vs 14.2 = 23.2%; RDCF -1.3% vs 6.0% (+7.3pp); YTD 25.7%, 5y 10.5%, 10y 14.3% Sonova SOON — 5.4%, 19.6, 25.0, ER 10.4%, FV 214.8 vs 208.8 = 2.8%; 19.6 vs 25.6 = 23.4%; RDCF 6.0% vs 5.4% (-0.6pp); YTD 0.2%, 5y -7.0%, 10y 4.9% S&P Global SPGI — 11.5%, 22.3, 25.0, ER 13.6%, FV 626.1 vs 424.4 = 32.2%; 22.3 vs 29.5 = 24.4%; RDCF 9.8% vs 11.5% (+1.7pp); YTD -17.2%, 5y 3.0%, 10y 14.5% SS&C Technologies SSNC — 10.5%, 10.3, 13.0, ER 14.7%, FV 111.7 vs 69.9 = 37.4%; 10.3 vs 13.0 = 20.8%; RDCF 1.5% vs 10.5% (+9.0pp); YTD -11.7%, 5y 10.2%, 10y 8.6% Tatton Asset Management TAM — 10.0%, 16.4, 20.0, ER 16.3%, FV 12.1 vs 5.9 = 51.6%; 16.4 vs 22.5 = 27.1%; RDCF 5.4% vs 10.0% (+4.6pp); YTD -11.7%, 5y 10.2%, 10y 13.5% Topicus.com TOI — 15.0%, 25.6, 25.0, ER 14.8%, FV 204.1 vs 104.5 = 48.8%; 25.6 vs 49.2 = 48.0%; RDCF 11.0% vs 15.0% (+4.0pp); YTD -16.0%, 5y 12.7%, 10y 9.9% TransDigm TDG — 10.7%, 30.8, 25.0, ER 16.0%, FV 5027.4 vs 1238.7 = 75.4%; 30.8 vs 34.7 = 11.2%; RDCF 13.4% vs 10.7% (-2.7pp); YTD -8.8%, 5y 12.6%, 10y 16.6% Visa V — 13.5%, 23.4, 25.0, ER 15.0%, FV 606.5 vs 323.6 = 46.7%; 23.4 vs 28.3 = 17.3%; RDCF 10.0% vs 13.5% (+3.5pp); YTD -6.7%, 5y 7.7%, 10y 14.9% XPEL XPEL — 15.0%, 22.0, 20.0, ER 14.1%, FV 81 vs 44.6 = 45.0%; 22.0 vs 32.6 = 32.5%; RDCF 5.9% vs 15.0% (+9.1pp); YTD -11.3%, 5y -13.4%, 10y 46.5% Zoetis ZTS — 7.0%, 16.2, 25.0, ER 15.0%, FV 118.4 vs 79.4 = 32.9%; 16.2 vs 31.7 = 48.9%; RDCF 5.7% vs 7.0% (+1.3pp); YTD -37.0%, 5y -19.8%, 10y 5.1% 3i Group III — 11.0%, 25.7, 30.0, ER 16.5%, FV 49.7 vs 22.1 = 55.5%; 25.7 vs 30.2 = 14.9%; RDCF 11.7% vs 11.0% (-0.7pp); YTD -31.2%, 5y 15.2%, 10y 14.8%]
15 out of the 18 companies that we own are a 'Buy' right now:
Medpace Holdings ($MEDP)
Evolution AB ($EVO)
Brookfield Corporation ($BN)
Brown & Brown ($BRO)
Dino Polska ($DNP)
Kinsale Capital ($KNSL)
Interparfums ($IPAR)
Ameriprise Financial ($AMP)
Visa ($V)
Topicus ($TOI)
Kelly Partners Group ($KPG)
Novo Nordisk ($NOVO-B)
Constellation Software ($CSU)
Zoetis ($ZTS)
3i Group ($III)
I truly believe some great opportunities can be found in the list above.
1) Forward P/E
Here are the most undervalued companies based on the Forward PE:
[Table image — most undervalued on Forward PE (current fwd PE / 5-year average / undervaluation): Goosehead Insurance 15.7 / 76 / 79.3% Paycom Software 12.2 / 43.8 / 72.1% EPAM Systems 8.8 / 30.8 / 71.4% Paylocity 13.7 / 42.7 / 67.9% Adyen 21.2 / 64.3 / 67.0% lululemon athletica 11.2 / 33.1 / 66.2% Gartner 11.4 / 33.4 / 65.9% CoStar Group 25.2 / 73.2 / 65.6% Adobe 10.8 / 30.9 / 65.0% Mips AB 23.8 / 59.6 / 60.1% Qualys 12.1 / 30.1 / 59.8% Insperity 10.4 / 25.2 / 58.7% FactSet Research Systems 11.5 / 27.3 / 57.9% Novo Nordisk 12.3 / 27.8 / 55.8% ATOSS Software 24.9 / 54.4 / 54.2%]
One company that definitely stands out? Mips AB ($MIPS).
Mips AB is a Swedish safety technology company that develops patented brain protection systems for helmets.
This market leader is trading at its cheapest valuation level ever:
[Image — Mips valuation history. Source: Fiscal.ai]
The company is expected to triple its earnings in the next few years.
[Image — Mips earnings estimates. Source: Fiscal.ai]
2) Earnings Growth Model
Here are the most undervalued companies based on our Earnings Growth Model:
[Table image — most undervalued on the Earnings Growth Model (EPS growth / dividend yield / FWD PE / fair exit PE / expected return): CTS Eventim EVD 13.9% / 2.6% / 17.0 / 25.0 / 21.2% Goosehead Insurance GSHD 15.0% / 0.0% / 15.7 / 25.0 / 20.9% Adobe ADBE 12.3% / 0.0% / 10.8 / 20.0 / 20.8% FactSet Research Systems FDS 6.9% / 1.7% / 11.5 / 25.0 / 20.3% Marimekko MEKKO 9.5% / 4.0% / 15.0 / 25.0 / 20.2% Gartner IT 8.0% / 0.0% / 11.4 / 25.0 / 19.9% Kainos Group KNOS 11.9% / 3.4% / 17.1 / 25.0 / 19.9% Ares Management ARES 12.0% / 4.1% / 18.2 / 25.0 / 19.8% Paycom Software PAYC 12.3% / 1.1% / 12.2 / 20.0 / 19.8% lululemon athletica LULU 7.4% / 0.0% / 11.2 / 25.0 / 19.7% TransUnion TRU 13.9% / 0.7% / 14.7 / 21.8 / 19.4% DiaSorin DIA 10.2% / 1.8% / 14.6 / 25.0 / 19.1% Admicom ADMCM 13.0% / 1.0% / 16.6 / 25.0 / 19.1% Enghouse Systems ENGH 1.8% / 6.9% / 12.3 / 25.0 / 19.0% Novo Nordisk NOVO B 8.6% / 4.1% / 12.3 / 20.0 / 19.0%]
CTS Eventim AG & Co. KGaA ($EVD) is one of those few businesses that are least likely to be affected by AI.
They sell tickets and run live events
People still want to attend concerts, festivals, and sports events
AI can't replace real-life experiences
The company has shown strong growth since COVID:
[Image — CTS Eventim growth. Source: Fiscal.ai]
CTS Eventim has delivered attractive returns to shareholders over the years.
For those looking for stable return with less AI exposure, CTS Eventim can be an interesting businesses to look into.
[Image — CTS Eventim. Source: Company Presentation]
3) Reverse DCF
Here's a list of the most undervalued companies based on Our Reverse DCF:
[Table image — most undervalued on the reverse DCF (required growth / expected growth / difference): Equasens EQS -3.70% / 12.70% / 16.40% CTS Eventim EVD -0.80% / 13.90% / 14.70% Gildan Activewear GIL 2.40% / 15.00% / 12.60% LEM Holding LEHN -1.60% / 11.00% / 12.60% SDI Group SDI -1.60% / 10.00% / 11.60% RH RH -0.50% / 11.00% / 11.50% Admicom ADMCM 2.10% / 13.00% / 10.90% Nexstar Media Group NXST -0.60% / 10.00% / 10.60% TransUnion TRU 3.40% / 13.90% / 10.50% Paycom Software PAYC 1.90% / 12.30% / 10.40% New Wave Group NEWA B 4.70% / 15.00% / 10.30% InfraCom Group INFRA -1.20% / 9.00% / 10.20% Synektik SNT 0.10% / 10.00% / 9.90% Adobe ADBE 2.80% / 12.30% / 9.50% Esquire Financial ESQ 4.40% / 13.50% / 9.10%]
The Big Picture
Today, 69 companies are undervalued on each valuation method.
This number has never been higher
[Image — the full watchlist coloured by valuation method]
Our Portfolio
Here's what the valuation for our Portfolio looks like:
[Table image — Our Portfolio: conviction (quality) and rating (valuation), with the three models. Medpace Holdings — Very Strong / BUY — EPS growth 12.0%, FWD PE 29.7, ER 10.4%, FV 478 vs 454.3 = 5.0%; fwd PE 29.7 vs 29.4 = -1.0%; RDCF 9.9% vs 12.0% (+2.1pp) Evolution AB — Medium / BUY — 5.7%, 11, ER 14.3%, FV 1022.9 vs 697.6 = 31.8%; 11 vs 15 = 26.7%; RDCF -2.9% vs 5.7% (+8.6pp) Kelly Partners Group — Strong (+) / STRONG BUY — 12.0%, 18.1, ER 15.8%, FV 6.9 vs 4 = 42.1%; 18.1 vs 29.3 = 38.2%; RDCF 10.0% vs 12.0% (+2.0pp) Brown & Brown — Strong (+) / STRONG BUY — 10.2%, 14.6, ER 15.1%, FV 93.8 vs 58.9 = 37.2%; 14.6 vs 24.7 = 40.9%; RDCF 5.8% vs 10.2% (+4.4pp) LVMH — Strong / HOLD — 9.6%, 19.9, ER 14.8%, FV 778.5 vs 479.1 = 38.5%; 19.9 vs 24.9 = 20.1%; RDCF 8.5% vs 9.6% (+1.1pp) Games Workshop — Very Strong / HOLD — 7.0%, 33.1, ER 6.4%, FV 125.6 vs 189.8 = -51.1%; 33.1 vs 23 = -43.9%; RDCF 14.3% vs 7.0% (-7.3pp) Dino Polska — Strong / BUY — 15.0%, 17.7, ER 16.3%, FV 66.8 vs 29.6 = 55.8%; 17.7 vs 24.9 = 28.9%; RDCF 14.1% vs 15.0% (+0.9pp) Kinsale Capital — Very Strong / STRONG BUY — 11.0%, 17.2, ER 12.9%, FV 409.1 vs 306.1 = 25.2%; 17.2 vs 28.6 = 39.9%; RDCF 5.8% vs 11.0% (+5.2pp) Interparfums — Strong / BUY — 10.0%, 18.6, ER 14.4%, FV 153.3 vs 91.3 = 40.5%; 18.6 vs 26.3 = 29.3%; RDCF 4.3% vs 10.0% (+5.7pp) Ameriprise Financial — Very Strong / BUY — 9.8%, 11, ER 11.9%, FV 555.9 vs 454.7 = 18.2%; 11 vs 11.7 = 6.0%; RDCF 1.1% vs 9.8% (+8.7pp) Visa — Very Strong / BUY — 13.5%, 23.4, ER 15.0%, FV 606.5 vs 323.6 = 46.6%; 23.4 vs 28.3 = 17.3%; RDCF 10.0% vs 13.5% (+3.5pp) Topicus.com — Very Strong / STRONG BUY — 15.0%, 25.6, ER 14.8%, FV 204.1 vs 104.5 = 48.8%; 25.6 vs 49.2 = 48.0%; RDCF 11.0% vs 15.0% (+4.0pp) HgCapital Trust — Strong (+) / BUY — 12.0%, share price 3.81 vs NAV per share 5.6, ER 16.3%, 32.2% discount to NAV (the reverse-DCF columns are marked "/" — not applicable) Novo Nordisk — Medium / STRONG BUY — 8.6%, 12.3, ER 19.0%, FV 632.3 vs 283.9 = 55.1%; 12.3 vs 27.8 = 55.8%; RDCF 10.0% vs 8.6% (-1.4pp) Constellation Software — Very Strong / STRONG BUY — 15.0%, 15.8, ER 17.9%, FV 7830.5 vs 2969.3 = 62.1%; 15.8 vs 31.5 = 49.8%; RDCF 10.0% vs 15.0% (+5.0pp) Brookfield Corporation — Very Strong / BUY — 12.0%, 46, ER 17.4%, FV 124.1 vs 62.1 = 49.9%; 46 vs 45 = -2.2%; RDCF 7.4% vs 12.0% (+4.6pp) Zoetis — Strong (+) / STRONG BUY — 7.0%, 16.2, ER 15.1%, FV 118.4 vs 79.4 = 32.9%; 16.2 vs 31.7 = 48.9%; RDCF 5.7% vs 7.0% (+1.3pp) 3i Group — Very Strong / BUY — 11.0%, 25.66, ER 16.49%, FV 49.7 vs 22.09 = 55.52%; 25.66 vs 30.2 = 14.9%; RDCF 11.7% vs 11.0% (-0.7pp)]
There are Seven Strong Buys in our Portfolio today:
Kelly Partners Group ($KPG)
Brown & Brown ($BRO)
Kinsale Capital ($KNSL)
Topicus ($TOI)
Novo Nordisk ($NOVO)
Constellation Software ($CSU)
Zoetis ($ZTS)
Conclusion
That's it for today. Here's what you should remember:
Watch out for IPOs and AI companies in today's market
Quality stocks look very attractive right now
Update Buy-Hold-Sell List:
4 Stocks went from Hold to Buy: Medpace Holdings ($MEDP), Microsoft ($MSFT), TransDigm Group ($TDG), Berkshire Hathaway ($BRK)
1 Stock went from Buy to Hold: Alphabet ($GOOGL)
1 Stock went from Sell to Hold: Hermès ($RMS)
1 Stock went from Hold to Sell: Judges Scientific ($JDG)
7 Companies are a 'Strong Buy': Brown & Brown ($BRO), Kinsale Capital ($KNSL), Topicus ($TOI), Kelly Partners Group ($KPG), Novo Nordisk ($NOVO), Constellation Software ($CSU), Zoetis ($ZTS)
As a reminder, you can find the entire Buy-Hold-Sell List here: Buy-Hold-Sell
And always remember: today is an amazing day to add great companies to your portfolio.
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