Buying these stocks, at these prices

👀 A glimpse inside my watchlists

Francesco Ferrari

Oct 12, 2024

Hi friends,

I’m Francesco and today I’ll bring you inside one of my watchlists.

⭐ Curious to know the prices at which I may buy these 10 quality stocks? ⭐

Stay with me!

Before we start, save for later these episodes if you missed them:

🏅 Diary of September 2024: How I doubled my savings in 3.75 years
💎 Analysis of a Tele-Health stock I like
📢 ‘Stop (over)using the P/E ratio’

That being said, let’s go!

Disclaimer & Rules of the Game

A couple of words on how to approach these analyses:

Target prices are always projected in a 3-fold scenario: bear, base, bull.
They come as a result of the Stock Predictor Tool that I personally use for my research, whose assumptions have been defined on past stock research that may or may not need to be completed.
These are 5-year projections: prices can go way lower than that in the meantime.
This is not investment advice! Do your own research. I’ve been analyzing these companies for months, but my work may not be aligned to your specific needs.
I never buy or sell based on target prices only. There are many qualitative judgements to take into consideration before initiating a new equity position.

Now we can proceed with the 1st of these 10 stocks.

10. Cintas

Uniform and rental facility provider, and a marvelous stock for those who had the vision a while ago. A tremendously efficient business, with a strong cost leadership.

🎯 My target price is in the range of $149, a -28% from current levels.

9. ServiceNow

Put cloud and AI together and we have one of the most successful cloud-base software companies out there. With consistent revenue growth and significant earnings power, NOW is one of my dream stocks.

🎯 My target price is in the range of $635, a -32% from current levels.

8. Zoetis

The world’s largest animal health company, providing vaccines, medicines, and diagnostic products for livestock and pets at a global level. A strong MOAT which makes the stock attractive as more defensive play.

🎯 My target price is in the range of $148, a -22% from current levels.

7. Visa

Does Visa need an introduction? It shares with Mastercard one of the most dominant duopolies in the entire world economy. Apparently, the stock is gradually getting very interesting.

🎯 My target price surprisingly suggests a clear buy at current levels, with a 5-year low-estimate in the range of $325, +17% from current levels.

6. Copart

This is one of the newest stocks for me. The online vehicle auction company specializing in used, salvage, and insurance vehicles, seems to possess remarkable strategic power. Will definitely dive deeper!

🎯 My top-down valuation screener suggests a target price in the range of $41, a -27% from current levels.

5. Moody’s

Another case where we don’t really need an introduction. As of now, one of the strongest financial MOATs out there. Similar to ZTS, this is the type of stock I’m monitoring in case I decide to position more defensively moving forward.

🎯 My top-down valuation screener suggests a target price in the range of $300, a -36% from current levels.

4. Nvidia

Yes, Nvidia is on my dream watchlist. Despite the giant move over the past 18 months, I am closely monitoring the stock should it experience a temporary downturn, as it still exhibits on paper an interesting risk-reward despite conservative projections.

🎯 My top-down valuation screener suggests a target price in the range of $104, only a -23% from current levels.

3. Teladoc

Yes, this forgotten Cathie Wood bubble stock may have won my interest now as 2025 approaches. The company is FCF positive, which is a potential anticipation of future earnings power.

If Management executes at double-digit growth, which doesn’t seem impossible in an industry projected to grow 17% CAGR until 2030, this may become a nice turnaround story. But I am diving deeper to avoid any possibile business trap.

🎯 My target price surprisingly suggests a buy at current levels, with a 5-year low-estimate in the range of $11.6, +26% from current levels.

Remember that this implies the company survives amid a profitability pattern which we haven’t clearly seen yet.

2. Microsoft

Perhaps my number 1 dream stock, MSFT represents one of my biggest investing mistakes when I passed on it back in 2022 at around $220 per share.

Again, no introduction needed: a marvelous, sticky, diversified, innovative Tech conglomerate.

🎯 My top-down valuation screener suggests a target price in the range of $329, -21% from current levels. Not that far!

1. Zscaler

At the intersection of cloud and cybersecurity, ZS is one of my favorite picks in the immediate term. Its unique business model, together with an untapped earnings power, make the stock attractive to my standards.

🎯 My top-down valuation screener suggests a target price in the range of $127, -36% from current levels.

Summary

Here’s a summary of the 10 positions:

In general, this is what I’m noticing:

For many of these positions, we’re 25%-30% off from very attractive entry points. This may sound a lot, but considering the high expected Beta of the majority of this list, an overall market correction of only 15% could be enough to trigger these entry points.
Visa and Teladoc seem two obvious buys at these prices, but experience tells me I will extend my qualitative research to prevent any value traps.
Since 2021, the fundamentals of many of these companies did significantly improve. What looked very expensive 3 or 4 years back, may seem cheap now. Think of Microsoft: it looks cheap at $320 today, but in 2021 this price was seen as far too extended to the upside. Moral of the story: when earnigns compound at such a fast clip over time, so do fundamentals.