5 Undervalued Stocks to Buy After Earnings

本站添加: 2026-05-20

[00:00:00]So, as I'm sure we all know, the S&P 500 is continuing to make new all-time highs, and even today, it just made another all-time high. However, what I have been noticing is that the S&P's gains are continuing to come from a smaller and smaller group of stocks. So, while the S&P is continuing to rally, there's actually a lot of stocks that are still well off their all-time highs.

[00:00:22]And I believe that these stocks are starting to offer a significant amount of value. So, what I want to do in today's video is discuss five stocks that I think are still looking attractively valued in the market and go through their recent earnings reports to update you with their numbers and why I think that they are looking cheap today.

[00:00:40]Before we get into today's video, I'm happy to let you know that this video is sponsored by Mumu. Mumu is an international stock brokerage that has over 29 million global users across seven countries and is an official partner of the NASDAQ. And crucially for us here in Canada, they are a member of the CRO and the CIPF. This means that your accounts are protected for up to 1 million Canadian dollars, which gives you that banking level peace of mind.

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[00:01:46]For example, New Bank is reporting on May 14th, and we can see the analyst estimates for growth, if analysts are expecting them to beat or miss their earnings, and even how the stock has responded after the last four earnings releases, where the stock has gone up 2% on average after reporting. Mumu also has some great welcome bonuses running right now. If you deposit $1,000, you receive a $60 cash rebate and a 3month membership to Stock Unlock, which is pretty amazing. If you would like to learn more about Mumu and take advantage of these offers, then make sure to click the link at the top of the description.

[00:02:19]And thank you again to Mumu for sponsoring today's video. So, with that being said, let's now dive into the video. And the first stock that I think is offering value is Skyward. The ticker symbol is SKWD.

[00:02:31]This is a specialty insurance company, and the motto of the business is to rule our niche. and they operate in a bunch of different niche segments within the insurance industry where they believe there is not a lot of competition and they are actually the market leader within some of these specialized segments. In their most recent investor presentation, they say that they operate an 11 distinct underwriting divisions and the construction of their insurance portfolio is intentionally balanced with our largest business representing only 13% of the portfolio. Then they also say that nearly half of their portfolio is in low PNC cycle sensitive lines. And this is all important because the insurance industry is facing some headwinds right now which is why a lot of insurance stocks have been sold off in the market. But Skyward's portfolio and their insurance operations are not nearly as cyclical and they're not seeing as many headwinds as the overall insurance market and their business is actually continuing to grow very well.

[00:03:28]This next screenshot comes from their Q1 earnings presentation, and we can see that their book value per share is now $27.50, up 10.4% quarter-over-arter. Diluted operating earnings per share also came in at an all-time high of $1.25, which means that the company is now doing about $5 per year in earnings per share. And they're also expecting their earnings per share to continue growing throughout the remainder of the year.

[00:03:53]But regardless, since the first quarter of 2023, they have compounded their earnings per share by 41% per year. So regardless of the headwinds that the insurance industry is currently seeing, Skyward is still continuing to kill it and grow very well. From Skyward's Q1 earnings call, the CEO also had a couple of interesting quotes that I want to highlight. So the first one says, "We've never missed consensus as a public company. Every quarter, we've exceeded consensus. we're committed to giving guidance that we believe is achievable and if we can beat that guidance, we'll beat the guidance. Then he also said, I'm pretty confident that we're going to hit and hopefully, you know, meaningfully exceed the guidance that we provided late last year. So based on these quotes, Skyward is a business that has never missed analyst estimates and their own targets since they have been a public company. That is a pretty phenomenal track record. Now, additionally, he is saying that he is very confident that Skyward is going to beat their 2026 earnings per share guidance and potentially by a meaningful amount. So, in this next screenshot, I have their guidance for the full year of 2026. And they are expecting net income of roughly $210 million, GAP earnings per share of roughly $4.60, and adjusted operating earnings per share of roughly $5. So Skyward's operating earnings per share outlook for this year is roughly $5 per share. Now what's interesting is again just in the first quarter they're at $1.25 in earnings per share. And on an annualized basis that's already five bucks in earnings per share for this year. So if Skyward can at least maintain their existing earnings for the remainder of the year, then they're going to hit the top end of their guidance. But this is a company that I believe will continue to grow throughout the remainder of 2026.

[00:05:35]So, I believe that they are also well on track to beat their high-end guidance of $5 in earnings per share, which is also what the CEO is suggesting here. Now, why this is all important is because Skyward stock is selling for about $45.58 in the market today. Now, what this ultimately means is that if Skyward can hit their $5 in earnings per share guidance for this year, then the stock is trading for about 8.7 times 2026 earnings projections. Now, what's interesting about this business is if we zoom out, since they've been a public company, they have been compounding their revenue by about 28% per year, and they just had a very strong record-breaking first quarter of $474 million in revenue. Now, if we also take a look at their earnings since they've been a public company, they have compounded by about 43% per year, and they're expecting earnings to grow to about $25 million this year, which would be another about 15% growth. Now, one last chart that I have to show you is Skyward's historical forward price toearnings ratio. And we can see that their forward PE is currently sitting around 9. And historically, we can see that the stock traded around 13 times forward earnings just back in 2024. But it has come under serious selling and has seen serious multiple compression despite the underlying fundamentals of the business continuing to grow be at all-time highs and the outlook for 2026 looks like it is remaining to be strong.

[00:07:01]So to put it simply Skyward is a business that is trading for under 926 earnings which is a very low price multiple in my opinion. It's well below the company's historical averages. Their fundamentals are at an all-time high and the business is continuing to grow at double-digit rates. So, it seems like this stock has been sold off with the overall insurance industry, but it does seem like a little bit of an outlier that isn't necessarily as exposed to the overall cyclicality of the insurance industry. And for these reasons, I think that Skyward is looking very interesting in the market. Now, full disclosure, I have not taken on a position in this stock, but it is at the top of my research list. But insurance has always been slightly out of my circle of competence, and it's one that I really just got to dig into more. But just at face value, I do think that it is looking very interesting. So, if you're someone who knows the insurance industry well, then this could be a stock to put on your radar and research more, too.

[00:07:55]All right, now let's move on to the second stock that I want to talk about, which is Shift 4 with the ticker symbol four. Now, this is actually a stock that I have talked about a few times on my channel previously, but I have never taken a position. And the reason that I haven't taken a position is because I think the moat of this business is questionable. After researching Toastmore, I found that Toast was successfully taking customers from Shift 4, especially in the United States restaurant industry. And I thought that this was a pretty clear indicator that Shift 4's moat could be successfully eroded and attacked by a competitor like Toast. Now, Toast's business does seem specifically focused on the United States restaurant industry, and Shift 4 is much more of a globally diversified business, but I still think that this is an example that their moat can be successfully crossed. So, that kind of prevented me from buying into the stock.

[00:08:44]However, Shift for share price has continued to fall at the same time as they continue posting very strong earnings results and they have a very strong outlook for 2026. The founder is also continuing to buy tens of millions of dollars worth of shares in the open market, but I'm getting a little bit ahead of myself, so let's dive into their most recent earnings report. In the Q1 shareholder letter, the CEO wrote, "2026 has thus far begun with significant volatility. Despite this volatility, our business performed resiliently during the first quarter. We performed in line with or exceeded our guidance for all metrics. Gross revenue was $1.1 billion, which is up 32% year-over-year. Gross revenue less network fees was 549 million, and gross profits was 370 million, up 49% and 54% year-over-year, respectively. When adjusting for our acquisitions and divesters, our organic growth was 11% year-over-year. This was in spite of a drag of 4% from intentionally depreciated legacy revenue. So without that, organic revenue growth would have actually been 15%. IBITA was 183 million and adjusted IBITA was 234 million. Each was up 63% and 39% respectively. Lastly, net cash from operating activities was 134 million, up 40% and adjusted free cash flow was 88 million, up 26%. So in Q1, across the board, Shift 4 posted doubledigit growth. Even their organic growth was 11% year-over-year. Their free cash flow, IBIDA, gross profits, and overall revenue grew by over 30% across the board except for free cash flow. But these are very strong numbers from Shift 4. This next screenshot from their Q1 presentation shows that their payment volume hit 56 billion in the first quarter and has been compounding by 44% annually since 2022. Gross profits also grew very strong year-over-year to 549 million. Adjusted IBITA also grew strong to 234 million and operating and free cash flow both grew strong as well and are at record highs for the first quarter with $88 million of free cash flow generated.

[00:10:53]Shift 4 also gave us their outlook for the next few quarters and in the next quarter they are expecting revenue to grow by 49% but then in the third quarter they are expecting 13 to 21% growth and then in the fourth quarter they are expecting 10 to 18% growth. So, Shift 4 is expecting their revenue growth rates to decelerate into the end of the year. And the reason that their year-over-year revenue growth rates drop so significantly in the third quarter is because this is when their large acquisition that they did over the past year starts to lap. So, these growth rates into the end of the year are more an organic revenue growth rate. And we can see that they are once again expecting deceleration into the end of the year. Now, in terms of free cash flow though, Shift 4 is expecting about $500 million in free cash flow for 2026, which is a significant amount of cash generated. And they just reaffirmed this guidance. So, they seem to have high confidence that they're going to generate half a billion in cash flow in 2026. Now, why this is important is because Shift 4's market cap is only $3.24 billion today. So, if we go 3240 divided by $500 million in expected free cash flow this year, then it means the stock is trading for about $6.5 times 2026 free cash flow expectations. This is a very very low price for this business in my opinion. Now, what makes this even more interesting is that Shift 4 has started to buy back a significant amount of their shares. In the first quarter of 2025, they had 92 million shares. And as of the most recent quarter, they have 73.6 million. So, they have bought back almost 20 million shares over the past year, which is a 20% reduction in the company share count. So, they are plowing all of their free cash flow and more into buying back stock when they believe that the stock is significantly undervalued. Now, additionally, if we take a look at the long-term revenue growth of this business, it is very strong and very steady. They have been compounding revenue by 46% annually since the third quarter of 2020. And this business is now trading for under seven times 2026 free cash flow expectations while also continuing to grow by doubledigit growth rates. And here I have a screenshot from the founder of Shift 4, who owns over 20% of the company. And he has been buying tens of millions of dollars worth of shares in the open market. And his most recent buy was on May 13th with another $16 million worth of shares purchased at $41 per share. So, this guy owns over 20% of the company and he's continuing to pour tens of millions of dollars into buying even more shares, which I think suggests, you know, he is continuing to be very bullish on the company and thinks that it is offering a significant amount of value. And when I take a look at Shift 4's growth expectations and the price today, the stock does look ridiculously cheap. I personally don't know why the stock is all the way down here. And it seems like payment companies in the market, even Mastercard and Visa, have been sold off and they are not participating in the overall rally the S&P 500 is seeing. But I also believe that this type of environment can offer significant value in specific sectors. While everyone is focused on memory, um, semiconductors and the hyperscalers and the large caps, it seems like they're heavily ignoring some specific sectors and stocks in the market. And it seems like Shift 4 could potentially be one of them. So for all those reasons, I think shift for stock is looking undervalued in the market right now. However, I do still question the true moat of this business and its quality because as I said, there are instances of Toast successfully taking some of their customers. But without that, the stock does look very cheap and that's why I wanted to put it in this video and also put it on your radar. All right, let's now move on to the third stock that I think is offering value in the market today. And this is one that I have been actively buying in my portfolio and it is Brookfield Asset Management. They just reported their earnings over the past week. They just reported their earnings over the past week and initially I thought the earnings actually did not look that good as we're going to see because I'm going to go through the earnings report. But what caused me to believe that this stock is actually looking quite cheap right now is their outlook. because the CEO, he actually did an interview on CNBC, but in the conference call, he basically said, he damn near guaranteed that Brookfield Asset Management is going to grow over 20% this year. Yes, they did have a slower start to the year, but he is saying that fundraising is accelerating massively and their institutional investors and clients are wanting significant amount of their capital invested in Brookfield's new infrastructure funds. So once these funds close, then Brookfield's AUM should grow significantly throughout the remainder of the year. And he said that it's going to be a record fundraising year for the company. Not by a little bit, but by far. Those are his words. So let's dive in to the earnings report now. So this is the first screenshot from the Q1 report. And here we can see that they fundraised $21 billion in the first quarter and $67 billion year to date, which is going to be important here in a minute. Trailing 12 months fee related earnings were 3.1 billion up 18% year-over-year. Quarterly fee related earnings were 772 million up 11% year-over-year. So BAM's fee related earnings on a year-over-year basis for the first quarter were only up 11% which is well below the company's guidance of 15 to 20% growth. Then the CEO wrote, "We expect 2026 to be a very strong year with growth exceeding our long-term targets. Both our infrastructure and private equity flagships that are currently in the market are expected to be their largest vintages ever. We are also benefiting from both the acquisition of Oak Tree and the recently awarded just group investment mandate which started in the second quarter. Our leading position in infrastructure, energy, real estate and essential services focused private equity are well suited for this environment and enable us to deliver strong performance and outsized growth. We have significant capital available to deploy as opportunities emerge. Marketle leading positions in the fastest growing alternative segments and limited exposure to areas of stress. So there is a lot that he just said right here.

[00:17:01]First off, Brookfield has some of their largest vintages ever actively being raised in the market right now. And once these vintages close, then they're going to significantly increase their assets under management and their overall fee related earnings. Second, they are expected to close their Oak Tree acquisition in the second quarter. And they also just closed their Just Group Insurance acquisition in the second quarter, which should add another $100 million in fee related earnings just from the insurance acquisition. Oak Tree is also a phenomenal business, which was founded by Howard Marx, who was a legendary investor, and this is now going to be wholly owned by Brookfield Asset Management, which I think is absolutely fantastic and should provide another avenue for continued growth going forward. Then lastly, BAM CEO is saying that Brookfield has exposure to the areas of the market that are seeing the most amount of growth like infrastructure, utilities, renewables, real estate, and they don't have exposure to the markets that are seeing stress like software and BDC's. Their software and BDC exposure is well under 1% of their AUM. And the entire reason why I chose to invest in Brookfield Asset Management in the first place so many years ago is because their investment strategy is entirely focused on owning real assets that make up the backbone of the global economy. These are like pipelines, oil assets, shipping terminals, renewable power, nuclear, data centers, and all of these assets that are in very strong demand across the globe right now. Brookfield's portfolio is built and centered on these assets and it seems like the market isn't really respecting this right now in my opinion because as energy continues to become more and more of the bottleneck for artificial intelligence development, Brookfield's underlying portfolio should grow in value significantly. But with that being said, let's get back to our charts. And this chart right here is one that I made myself because I track Brookfield Asset Management's fundraising every single quarter. Now, this quarter was a weaker one with $21 billion of funds raised.

[00:19:01]However, they said that they have $67 billion of funds raised yearto date now as of May 8th, I believe it was, which means that their second quarter fundraising is now at $46 billion, which would be around right here in the chart, which means that their second quarter fundraising so far with 6 weeks still left in the second quarter, is already at one of the best quarters in the company's history. it would actually be the second best quarter excluding this one which had a very large acquisition included. So Brookfield Asset Management is definitely raising a lot of money right now and that leads me to believe that the company is setting up to have a very strong remainder of 2026. All right, now let's move on to BAM's Q1 transcript highlights, which is where I think the most important information is.

[00:19:46]So Connor, the CEO said, "An infrastructure where digitalization, rising energy demand, and deglobalization are all creating sustained demand for capital. We continue to see exceptional client interest and a very large opportunity set. AI requires enormous physical infrastructure, data centers, power generation, transmission, fiber computing, cooling systems and industrial capacity across the supply chain. We are already deeply invested across those areas. This is also why all of our infrastructure, energy, and AI infrastructure strategies are seeing such significant interest. As AI adoption accelerates, Brookfield's marketleading position, and a very large portion of our assets become increasingly valuable, which is exactly what I was trying to say earlier on in the video. Brookfield's assets are the type of assets that are in very high demand across the globe right now. and I believe that they will only continue to see more demand as energy becomes more and more of the bottleneck for AI development. Moving on, Connor then said, "We have an incredibly positive outlook for 2026. We expect it to be a record year for fundraising and not by a little bit. We expect it to be a significant record year for fundraising.

[00:20:58]In response to your question, outperformance, yes, it's largely going to be on the fee related earning side and that outperformance for the remainder of the year feels largely secured other than, you know, the limited market exposure we have through our listed affiliates. Some big step change revenue adders that start this year and will candidly carry into next year as well. Our flagship private equity fund, our flagship infrastructure fund, the just group mandate, and our oak tree acquisition. We expect to see incredibly strong demand for our two flagships. PE is off to a great start and we expect that to be the largest vintage of its kind. We're in a very fortunate position that we have all of our infrastructure funds in the market right now at a time where we're in the greatest infrastructure capital deployment environment in the history of time. Then lastly, Connor said, "The demand for energy is at an unprecedented high and will continue to be at an unprecedented high throughout the end of this decade and well into the next one and perhaps beyond. It's going to require any and all or all of the above type of energy solutions and we're fortunate to be a leading player across all of them." So, the main takeaways that I got from the transcript are one that the CEO is incredibly bullish on Brookfield Asset Management for the remainder of the year and he thinks that they are going to exceed their targets for this year by a lot. Not just by a little bit, but by a lot. And this is largely because Brookfield's assets, as I have continued to say for years, are the type of assets that are in very high demand due to artificial intelligence growth and really what the AI secular tailwind needs, which is energy infrastructure. Brookfield is one of the leading companies across the planet for building and deploying energy. So as energy continues to become the bottleneck, they believe that they are going to be able to raise a lot more money and manage that money very effectively as they have been doing for decades. So, while the market has sold off Brookfield Asset Management stock to a very low price in my opinion, I have been buying up a lot of shares because I actually think that they are one of the companies that can help ease the energy bottleneck that we are seeing and will continue to see as Connor sees until the end of 2030 and potentially into the next decade. So for me, I think that Brookfield Asset Management is going to continue seeing tailwinds for years to come. And I think that this business is eventually going to become clear in the market that they are an AI winner, an AI beneficiary, and their assets are going to increase in value as energy bottlenecks continue. So now let's take a quick look at Brookfield Asset Management's historical price to earnings ratio. And its median since the beginning of 2024 has been 36.6 6 and it's currently trading for a PE of 31.6 which might sound expensive but this is a very high margin business with 60% profit margins. It pays out all of those profits as a dividend to shareholders and it is projecting its profits to grow by 20% per year. I think that's a very attractive stock and investment and that is why it has traded for 36 times earnings historically. So based on its historical averages, it's actually trading below what it used to trade for.

[00:24:09]Now lastly, let me show you my quick realistic DCF for BAM, which is right here. So in this DCF, I have BAM growing its earnings by 17% annually over the next 5 years, trading for 27 times earnings, which is well below their historical average of 36 times earnings, by the way, and growing the dividend by 17% annually over the next 5 years as well. And in this DCF, we get a compounded annual growth rate of $18.7% and a fair value of $70 per share US.

[00:24:39]And I think that the values in this DCF are arguably pessimistic because BAM is projecting roughly 20% annual earnings growth and 27 times earnings is below even what the stock trades for today.

[00:24:52]Now, if we also take a look at the dividends, this means that the future dividend yield on cost in 5 years would be 9.2% 2% and the dividend per share would grow to $441 by 2030. So this is a very attractive dividend growth stock as well and that is why I have also added it to my portfolio to increase my dividend income and have my dividend income grow over time. So Brookfield Asset Management is a stock in the market that I still think is offering a lot of value. It's still well off its all-time highs. Its dividend yield is over 4% still. It's projecting to grow that dividend by 15 to 20% annually along with the earnings. And it seems like this business overall has significant tailwinds that are going to propel its growth into 2030 and even into the next decade. So this one is a long-term hold for me. I know that the stock is, you know, as I said, it's still down from its all-time highs, underperforming the S&P 500 lately. But I think that it is still offering a lot of value, and that is why I have readded it to my portfolio. and I will be a consistent buyer in this price range. So with that being said, let's now move on to the fourth stock that I think is offering a lot of value in this market.

[00:26:02]And this one is Marcato Libre. Marcato Libre recently reported its earnings and it has fallen roughly 15% after the earnings report. I did a full video on my channel discussing the bare case, why it is down, and also covering the earnings report. So in this video I just want to highlight some different points and show you why I think Marcato Libre stock is so undervalued in the market today. So Marcato Libre recently updated their investor presentation after their first quarter earnings results. So I want to go through some of the new slides here. The first one is that Marcato Libre is the number one e-commerce platform across many different regions of Latin America.

[00:26:41]number one in Mexico, Chile, Argentina, Brazil, Colombia, and even more. They are the dominant e-commerce platform. In fact, if we take a look at Mellie's gross merchandise volume index versus the overall Latam gross merchandise volume index, you can see that Marcato Libre is growing significantly faster than the underlying Latin America market, which means that they are continuing to take more and more market share as the business grows. Another slide that they recently updated which I think is extremely bullish is their digital ads market share and revenue. So in the last 12 months they have now generated 1.75 billion of ads revenue and their advertising market share increased by 3% quarter over quarter to 10% in Latin America. So, Marcato Libre is continuing to take more and more of the digital advertising market share in Latin America, which I think is very bullish for this business over the long term. In Marcato Librey's Q1 earnings report, they also wrote this about their advertising business. Advertising is a large and fast growing opportunity as traditional channels still account for half of the market in Latin America versus just a quarter in the United States. As those budgets migrate towards digital, we are capturing a disproportionate share of the growth because of the data structural advantages we have built. As the region's leading commerce and fintech ecosystem, a huge audience, rich firstparty data, and strong performance attribution, we have been one of the fastest growing players in the region, four times the market in 2025. And this strong momentum continued in the first quarter with ads revenue growth of 63% year-over-year and 73% in US dollar terms. This growth is driven in large part by our investments in technology that improve setup, targeting, and measurement and the results are visible.

[00:28:33]More sellers are activating advertising products and those who are already using them are investing more. So, Marcato Librey's advertising business is exploding. It grew 73% year-over-year in US dollar terms and it's growing four times as fast as the overall market which as we saw means that Marcato Libre is taking significant market share in the digital advertising market in Latin America and I believe that this will be a massive tailwind for the business over the longer term and also improve the margins of the business over the longer term as well. Now moving on to the next screenshot. This one is Marcato Libre's fintech business and their monthly active users. Now, what's interesting is their monthly active users increased by 5 million people quarter over-arter, which means that Marcato Libre is on track to add another 20 million monthly active users this year. What's also interesting is Marcato Libre also has the number one fintech monthly active users in Brazil, Argentina, Chile, and Mexico. So, they have a dominant leadership position for fintech users across Latin America as well. This next screenshot shows that Marcato Libre's revenue is diversified and has 22x since 2018. Think about that. Their revenue is up 22x in 6 years. That is absolutely insane. And their revenue growth is coming from different geographies and different businesses.

[00:29:57]Brazil, Argentina, Mexico, Chile are all providing significant growth for the business. And then their commerce services, commerce products, credit services, fintech services, fintech products are all growing on their own as well. And what I like about Marcato Libre is their different businesses help the other businesses grow. This is the flywheel of the overall company. And I believe that this is partly why Marcato Libre is seeing accelerated growth at scale because as each one of their business units grows, it helps the other business units grow as well. Now, while we're on the topic of business units, in the most recent quarter, every single business unit in every single economy except for Argentina saw a large amount of acceleration. Brazil is Marcato Libresy's largest market by far and revenue growth was 55% in the most recent quarter which is absolutely insane. However, Marcato Libre is doing this at the sacrifice of short-term margins. And we can see that their operating margin declined significantly and the net margin also declined significantly in the first quarter and on a year-over-year basis. Marcato Libre is a business that is not shy from investing back into itself at the sacrifice of margins to grow. And this is something that the company has always done. But whenever Marcato Libre does this, the market does freak out and it does become a concern for analysts. Now, if we take a look at Marcato Libre's income statement, we can see that margins are compressing from increased marketing spends and provisions for doubtful accounts, which is bad debt on the income statement. Now, the bears will say that this is a sign that Marcato Libre's credit portfolio is deteriorating, but I do not believe that it is. And this is because their credit portfolio nearly doubled on a year-over-year basis. And what the company does is provisions for all of the expected losses upfront. So while the credit portfolio is growing fast, provisions weigh down the margins, and it has always been this way. In fact, when we take a look at Marcato Librey's non-performing loans, they are down as a percentage on a year-over-year basis, which does suggest that their credit portfolio quality is actually improving.

[00:32:07]Marcato Libre also provisions more than 100% of their expected credit losses upfront when they write the loan. So the credit portfolio is actually improving but due to its rapid growth it is weighing down the operating and net income and margins. So now I want to show you some interesting charts from Marcato Libre's history. Here we can see that in 2023, Marcato Libre's operating margin was expanding greatly and it hit a high of 20% in the third quarter of 2023. And you can also see that from the fourth quarter of 2021 to the third quarter of 2023, Marcato Librey's operating margin was consistently expanding and the market absolutely loved this. Now during 2023, Marcato Libre was slowing down their credit portfolio growth with basically flat growth for most of 2022 and into 2023 as well. Now, if we take a look at Marcato Libre's income statement from this time, we can see that the provisions for doubtful accounts actually declined on a year-over-year basis in the third quarter of 2023. This led to a massive increase in margins and operating income more than doubled on a year-over-year basis. This is a reflection of what Marcato Libresy's margins could look like if they were not investing so aggressively in expanding their credit portfolio. Now, what is also interesting is in the third quarter 2023 shareholder letter, Marcado Libre said that at the same time as their margins were expanding up to a 20% operating margin, they were still heavily investing into growth and they saw revenue grow by 26% on a year-over-year basis. So, Marcato Libre achieved a 20% operating margin while still growing revenue 26% and continuing to invest back into the business. I believe that this suggests that the business's true operating margins could be pretty dang high once it decides to slow down its growth investments and once the credit portfolio stops seeing so much accelerated growth. So, let me show you my realistic DCF on Marcato Libre now using its EBIT or operating income over the next 3 years. And I'm saying that they could grow EBIT by 40% annually over the next 3 years, which I think is very realistic if they can continue to grow their revenue. And they do expand their EBIT margins once again. Then I also have them trading for a 20 price to operating income, which I actually think is very low for this business considering how high quality it is and how fast it is growing. But in this DCF with a 20 price to EBIT and 40% annual EBIT growth, we get a 28.7% compounded annual growth rate, a fair value of $2,500 per share, which is 60% above where the stock is currently trading, and a future stock price of $3,300 per share, which is more than a double from where the stock is trading today over the next 3 years. Now, as I just said, in my opinion, I think that this is actually a pretty conservative DCF for Marcado Libre because if they can continue to grow their revenue by over 20% annually over the next 3 years, which I think they will, and if they can even expand their operating margin back up to 15%, then they would actually beat a 40% compounded annual growth rate to their operating income. So, I think that Marcato Libre has a chance to see massive operating income growth over the longer term whenever they decide to expand their margins once again, which eventually I believe that they will. But in the meantime, the business is doubling down, investing in growth, and seeing accelerated growth at scale. And keep in mind, they're still profitable.

[00:35:46]They are not sacrificing profitability to do this. And the business still generated over $3 billion in operating income over the last 12 months. So over the longer term, if Marcato Libre can continue to see such strong revenue growth, maintain their marketleading positions across Latin America, expand their advertising business, and just continue growing overall, then eventually when they do expand their margins, the profits this business will see will be explosive. And by the time that happens, I think the stock is going to be materially higher. So in the short term, while the market is worried about margin compression, the loan portfolio blowing up, which I don't think is happening, and all of the other factors that you see people talking about, I think that all of this is ultimately making Marcato Libre stock significantly undervalued from a long-term perspective. Like when I think about where Marcato Libre will be by 2028, 2029, and 2030 relative to the price of the business today, a $78 billion valuation, I think it looks ridiculously cheap. And that is why Marcato Libre is one of the larger positions in my portfolio and ultimately why I am not concerned about this draw down because I think the draw down is due to short-term focus and not long-term fundamentals.

[00:37:04]So, while there is that disconnect, I think that this stock is offering significant value, and that's why I had to include it in this video. All right, now let's move on to the fifth and final stock that I want to talk about in this video, which is Meta. As I'm sure we all know, Meta stock fell after it reported its Q1 earnings results, which I thought was completely unjustified. Meta is seeing a very strong acceleration to its topline, which I believe suggests that their capex back into the business is actually paying off. The revenue growth is incredible. The operating cash flow of the business is also growing. It's at all-time highs. And the growth there has also been incredible. And funny enough, just like how the market is so focused on short-term margin compression over at Marcato Libre, I think it's also concerned about the same things over at Meta. Despite these businesses seeing accelerations to the top line, the market does not believe in their investments back into growth. And ultimately, the market does not believe in the short-term margin compression either. But over the longer term, I do believe that Meta will expand its margins and see its profitability grow very strongly with the top line once again once they are eventually done going through this capex cycle. So, let me show you some of the key highlights and charts from their most recent earnings report now. So this first chart right here is a chart that I like to update every single quarter and it is the net revenue added to Meta, Google, and Amazon's advertising businesses. And we can clearly see that Meta had the best quarter by far with $14 billion of advertising revenue added. They have been taking the most market share and seeing the most advertising dollar growth. And I think that this speaks volumes to the business and once again also suggests that their capex that they're doing is materially improving the business and paying off. This next chart is another chart that I like to update on a quarterly basis. And it shows Google searches trailing 12 months revenue, Meta's advertising revenue, and Amazon's advertising revenue. And we can clearly see that Meta is closing the gap to Google to soon become the largest digital advertising company across the planet. It's probably only going to be a few quarters at this rate before Meta overtakes Google. And I think that this is also speaking volumes to Meta's business and the improvements they're making. This next screenshot was the CFO outlook for the remainder of the year and the next quarter. And they are expecting revenue to grow by about 25% in the second quarter. So they are expecting a slight deceleration, but still very strong growth to the overall topline of the business. However, what the market did not like about this outlook was Meta increased its capex guide to about $135 billion for the year of 2026, which was up roughly $10 billion from the previous outlook. And in the current market environment, if you increase your capex guide, it is viewed as a pretty bad thing. So, the fact that Meta is willing to spend more money in 2026, the market didn't like because it suggests that their cash flow margins and net margins could be suppressed for the remainder of the year. So despite the top line growing and accelerating, the market did not like this increased capex spend. So now let's take a look at Meta's forward PE versus its history. And its forward PE today is right around 18. And its historical median all the way back to 2018 has been roughly 23. So Meta is trading well below its historical average forward PE on a gap basis. By the way, in my opinion, Meta is one of the highest quality businesses in the entire world and it's now trading for below a 20 forward price to earnings ratio at the same time as the top line is projected to continue growing by over 20% annually. And the top line is seeing accelerated growth, which leads me to believe that MetaT is looking undervalued in the market. And it's also why I have added more to my position after their earnings report when the stock saw another sell-off. Now, this next chart shows us Meta's historical price to operating cash flow. And today, it's trading for about 12.6 times operating cash flows. And the historical median has been about 16.5. So, even on a price to operating cash flow basis, Meta is trading well below its historical averages again at the same time as the top line is accelerating.

[00:41:12]So, let's now go load my Meta realistic DCF right here. And in this DCF, I do use its operating cash flow over the next 3 years. And I'm saying that Meta will grow its operating cash flow by 15% annually and trade for a 13 price to operating cash flow. So let's change this over to operating cash flow now.

[00:41:30]And if Meta can hit these targets, then the stock could compound by 16.4% annually over the next 3 years. Its fair value would be $732 and it would hit a share price of $968 by 2028. And I think that this is arguably a pessimistic DCF because Meta is growing well above 15% per year right now and its historical average price to operating cash flow was 16.5. So this is factoring in permanent multiple compression and a lower growth rate than what the company is currently seeing.

[00:42:01]This leads me to believe that Meta Stock is looking undervalued in the market right now. Overall, it's selling below its historical average forward PE, its historical average price to operating cash flow. at the same time as its top line is reacelerating which I believe suggests that its capex and investments back into the business are actually paying off. So I think that there is a disconnect in Meta's valuation in the market today. It has become a larger position in my portfolio and it is a stock that I am actively buying in the market in these price ranges because I think that its value is there and I do think that the stock is undervalued. But with all that being said, that is going to wrap up the video. And those are the five stocks that I think are looking very cheap in the market after their earnings reports. But let me know what you think down in the comment section below. And also let me know if you want me to take a look at any other stocks after they have reported earnings. But again, with that being said, that is going to wrap up the video. And as always, I truly do appreciate you tuning in. If you did enjoy the video, please remember to leave a like on it. And if you're new here and you want to see more, then please consider subscribing as well. So, thank you again and I really hope to see you in my next