Blind Ranking Tech Stocks Based on Valuation

本站收录: 2026-05-22

[00:00:00]Welcome back. My name is Arya and I don't waste your time. So, let's get straight right into it. Ladies and gentlemen, in today's video, we're going to be blind ranking 10 different stocks based off of how undervalued they are currently. Now, if you pay attention to the bottom of your screen, we do actually have 20 names here. And so, the reason I did that is it wouldn't be a true quote unquote blind ranking if we had only 10 stocks because eventually towards the end, you would know what stocks are coming up. So, at any point during this video, there's a whole bunch of options that could possibly come on the list. And again, we're going to be ranking them based off of how undervalued they are currently. So, we'll kind of go through it. It'll select something and I tried to choose a bunch of different companies that for the most part I would argue most of these names at the bottom here are in fact, you know, undervalued or very closely valued to one another. Should be a lot of fun. Without further ado, big thank you to Claude for generating this little website. And uh our first stock that will be ranking Google. Of course, they're going to start us off with Google. Uh in terms of Google, let us jump over to Fiscal AI, which is the world's greatest stock research platform. And the reason I say that is because of course you're able to go in here and you can bring in a whole host of different valuation ratios and metrics and fundamentals and whatnot. If you've been watching the channel for any period of time, you know how huge of a fan I am of fiscal AI. And so if we just simply take a look at uh the trailing PE ratio, this one's a little bit deceptive and I've talked about this at length a variety of different times where due to the investment gains that Google has realized, uh I shouldn't say realized, due to the investment gains that shows up on the income statement of Google, it actually on a core looking at the earnings generated from Google itself trades a little bit more rich than what is actually advertised here. And so perhaps I could best visualize that for you if we take a look at the PE minus investment gains. And you can see the massive delta between the gap trailing PE and the PE minus investment gains. At the same time, it should also be mentioned that if we pay attention to the growth that Google has been putting up, they have been accelerating the revenue growth over at the business. And so, all things considered, even though it is trading a little bit more on the rich side of things, I think the fundamentals are matching it. They're probably going to continue to accelerate that over the next handful of quarters.

[00:01:50]So, on a going forward basis, if we pay attention to the valuation, the true valuation relative to the growth, it shouldn't be too bad. I think I'd be happy with putting this one at a safe, call it seven, maybe six. I think I'm gonna go with seven for now. And by the way, you'll be seeing us using Fiscal AI throughout the entirety of this video.

[00:02:05]There is a link in the description down below where you can get a twoe free trial, no card required, if you'd like to give it a try. With that being, moving on to the second pick off the list, ASML. Fantastic. You know what?

[00:02:15]They're giving us all the all the hard ones, quote unquote. Uh so if we take a look at ASML, by the way, full disclosure, I am a shareholder of ASML.

[00:02:20]It's in fact my second biggest position.

[00:02:22]on the growth side of things at a surface level doesn't look the most attractive at the same time if you again pull in you know PE ratio EVA EBIT even a free cash flow uh actually works for this one you might think to yourself that hey ASML looks like it's trading at the higher bound of its historical range in terms of valuation uh for simplicity sake let's just take a look at the PE ratio which today sits at roughly 53 times and again if you look at it historically in 2021 that's where it roughly peaked at uh in summer of 2024 that's also roughly where it peaked at so from a surface level perspective ASML looks a little bit expensive, but I've actually outlined in a past video how ASML might actually be undervalued at the current prices, given that we should be expecting massive amounts of growth in the next handful of quarters to potentially next handful of years. ASML last year was a business that essentially only had two customers on the super high end with the EUV machines. Now they have five and I believe it's Micron that's actually paying upwards of 20 or 30% premium to the actual price of the EUV machines simply to leapfrog where they are in the list and be prioritized to have their shipments delivered ahead of other customers. And so if that doesn't tell you that a ASML has massive pricing power and b the demand for their machines are off the charts, which should translate to massive revenue reaceleration on a going forward basis, I don't know how else you take that information. With that being said, even though optically it looks expensive on a trading basis, I would argue that ASML on a going forward basis, factoring in the likely reaceleration and growth isn't actually that expensive. That said, I'm going to probably plop this one over into the fifth spot on our list. And the reason I have it there is because I think there's a lot of other names that pro are probably going to come up that are just more clear-cut stories that doesn't rely on a reaceleration and even on a trailing basis uh the the valuation works. With that being said, let us move on to the third pick here and we have Mastercard.

[00:04:01]This is super fascinating. Uh over the weekend, if you didn't catch it, there was this gentleman over on Twitter who essentially sold Mastercard because of the poor stock performance. That was his reasoning. That's it. He didn't look at valuations. He didn't look at anything else. he essentially justified his sale in Mastercard because it's down 20% while the S&P is up 20%. And he could have put that money into Caterpillar a year ago and and doubled his money. Um, again, you can take that logic with essentially any stock and basically outline the fact that, oh, we should have all bought, you know, sold everything that we own and put it into Sandisk 2 years ago and we would be up 4,000%. Right? So, we're we're all we're all idiots here, right? uh point is here that there's no nothing to factor the uh current valuation the trailing valuation the price at which he bought it at which has resulted in the decrease in price all that great stuff and perhaps this is best visualized again if I show you on fiscal the you know e to eBay for actually you know what let's do e cash let's switch it up essentially any valuation ratio you use will uh showcase that assuming that this gentleman bought it you know summer of last year whatever the case is the business at the time was trading at 35 36 times for cash flow today it trades at 25 times for cash flow which is the lowest valuation it is traded at. And I think you'd have to go all the way back to March of 2017 to find comparable valuations. Obviously, at the bottom of the 2022 dip, roughly traded at the same valuations. Bottom of the 2020 dip, roughly the same valuations. The 2018 tariff war thing, again, roughly in the same ballpark. The point is that like historically speaking, if we look at the past 9 years of where Mastercard has traded at on a valuation basis, this is typically the cheapest it gets. Period. So the next question we got to ask is has Mastercard fundamentally stayed the same business that has been over the n over the last nine years. We're talking in terms of moat. We are talking in terms of growth for both of those things. I would say absolutely yes without a shadow of a doubt. If you take a look at the growth that Mastercard has put up. I don't see this deviating much over the past decade. I think it's across the decade been roughly the same amount of growth.

[00:05:50]In fact actually they're growing faster than their decade average. Their decade average is 13% currently growing at 15 16% thereabout. Obviously, you have the COVID fluctuations and whatnot. Point is, on a growth basis, it's the same business. On a moat basis, it's actually a stronger business, I would argue, given that as time goes on, the network effect becomes stronger purely based off a valuation basis relative to the amount of growth that you're getting with this business. I'm actually inclined to put this pretty high up here. Again, there's a lot of different companies that could come up here that I would place ahead of Mastercard. So, I'm only going to plop it here uh at number four, but I do think that Mastercard shares are quite undervalued at the moment. This is what I was talking about by the way that it's probably a little bit difficult uh given there's so many stocks that are trading in the undervalued range. Service Now is next up and unfortunately I'm leaning towards a number six placement here. Um not because the business isn't undervalued is because again I'm factoring in that we only have three spots and you know if you get like uh I don't want to spoil the list but if you get some of these other names I'd have to place it uh ahead of Service Now.

[00:06:44]With that being said, taking a look at Service Now I've had a lot of people tell me that uh oh well you know the PE ratio is trading at 60 times earnings.

[00:06:51]Uh isn't that expensive? Are you? And the answer is no. And I've outlined this time and time and time again, you can't value all businesses off of the PE ratio. Case in point with something like Service Now, if you look at the current net margins of the business, these are not peak profitability margins. Uh we had this one-time tax thing that happened. But anyways, uh point is even if you look at uh for example the operating margins of the business, right? Service Now is nowhere near peak profitability. And you only really want to use income statement ratios such as the PE or such as the EV to EBIT when a business is quoteunquote mature and when it's able to be valued on the profits that they're generating and you know they're they're towards the peak profitability of their business. Service Now is nowhere near that. This is a 70 80% gross margin business. Um software stocks typically you know are able to at maturity have 30% operating margins roughly give or take maybe a little bit higher than that. Um, you know, you can take a look at something like Adobe or Microsoft, uh, Oracle before they pivoted massively towards the cloud and stuff like that. Those companies have operating margins in the mid30s, right?

[00:07:47]And so, we kind of have two ways to look at this. One, we can obviously look at the EV to sales ratio, which just factors in the revenue that the business is generating and uses that as a denominator. Or we can kind of artificially assign a peak profitability margin and look at it that way. So, I'll kind of do both and walk you through it here. I'm actually only going to say that Service Now has a 30% uh peak profitability margin. Some would argue that that's actually low, but nonetheless, let's just do it for simplicity sake. And so in theory, if Service Now was to wake up tomorrow and go to 30% net margins by cutting down on R&D costs, by cutting down on sales or marketing costs, become more efficient as an organization, which by the way we have many historical examples of famously Salesforce went from 2% net margins to 18% net margins in the span of like five quarters or something like that. So literally in the span of a year, these type of organizations can do that sort of a move if they so choose.

[00:08:35]So if the business were to become quoteunquote profitable, it would be trading at 25 times PE ratio. And today it trades at seven times sales. As a matter of fact, if we just simply look at that sales multiple, you might noticed that over the past decade, this is the cheapest valuation that Service Now has traded at. So I'm actually quite inclined to plop this up over into the third place. I think I'm pretty comfortable with that decision given that it's the cheapest valuation over the past decade. The business is as strong as ever, growing north of 20%.

[00:08:59]Matter of fact, they accelerated their growth. Matter of fact, they might even accelerate their growth even more given that AI, I would argue, is a tailwind for the business, not a detriment to them. I'm pretty happy with that selection. Moving on, we got what is this? The fifth one, Netflix. Okay, this one is super interesting. I I know I lied with the Service Now pick, but I am actually inclined to put this one into number six for now. Nonetheless, let's take a look at some of the valuation ratios with Netflix. They did have a bit of a growth scare last quarter. So I think growth within the quarter itself was pretty strong, but they had guided for 13 to 14% revenue growth, which was a little bit weaker than expectations. I probably expect them to continuously beat on that and actually come way above that. Something super fascinating that's happening with Netflix recently is that of course they have that new ad tier that they've implemented. And so I've kind of outlined this in maybe an exclusive video before. By the way, I have a Patreon if you're curious to come hang out with me and 400 other investors. Link for that's in the description. But I was talking about that in a exclusive video over on Patreon. how for the entirety of Netflix's relevant business, right? Of course, I'm not talking about the DVD business. For all of their history, basically, they've kind of had two avenues of driving incremental revenue growth. You can either get more subscribers or in some capacity charge more per subscriber, whether that's through price increases or moving that subscriber from a lower tier to a slightly higher tier, whatever the case is, right? So you're moving from maybe having only one screen to two screens or going to the supermax tier where it's like u you know you're able to view the content in 4K footage etc etc. Point is you have two ways to drive revenue growth from your customers increase prices on them and grow in in terms of user count. For the first time ever, they have introduced a third variable, and it's absolutely genius, which is that if I, as a Netflix ad tier subscriber, watch one hour of content, that's perhaps one ad per hour of content that I'm viewing. But if I'm a power user and I am watching 10 hours of content, right, for example, that means that I'm now seeing 10 ads. And so for a Netflix who is of course charging for those impressions, for the first time ever, they've tied their monetization directly to how much content the subscribers are watching. And there's like a secular tailwind of subscribers watching more and more content. The average Netflix subscriber watches two hours of content per day. And that has historically gone up over time. And so now you have this sort of uh other variable that should be able to drive a reaceleration in growth. It largely has over the past 2 years. I'm not sure exactly if it continues to grow, but the popularity in the ad tier combined with them potentially being able to bring on more advertisers, which drives liquidity for their ad network, more targeted advertising, the price of those ads goes up for the increased performance, stuff like that. I'm pretty positive on the business overall and them being able to not only sustain the current revenue growth, but even being able to drive further revenue growth. With all that being said, let us look at the valuation. I do think they have a a tax thing that happened recently. So maybe trailing PE is not the best way to look at this. So, let's also toggle in the EBT to EBIT ratio. Probably one of my favorite ratios because it, you know, reduces a whole bunch of noise and whatnot. Um, with that being said, it looks like obviously, you know, we're nowhere near the bottom valuation back here in uh what was this, 2022 when they had those massive subscriber losses, but nonetheless kind of middle of the range in terms of valuation. Not as expensive as it was last summer when it was super overvalued, not as cheap as it was back here, but at the same time, the business is stronger and growing faster than the last couple of years. So, I really don't want to put it at two. So, I think I'm going to have to go with six on this one. I do think shares are probably still pretty undervalued here. Starting to get tough here. Microsoft. Jesus Christ. Okay, so this is this is really starting to get brutal because we have uh spots 8, 9, and 10. I should have probably just placed Google lower to be honest with you and ASML for that matter. Uh anyways, I would have to put Microsoft at two because it's definitely not more expensive than any of these names. At the same time, it is it's probably somewhere middle of the pack.

[00:12:37]Yeah, I'm having a lot of trouble with this one. And they're accelerating in terms of their revenue growth. If we take a look at uh you know like forward PE on this below 20. Oh 22. Okay. So that does slightly change my stance. 25 times PE for Microsoft that is growing at 18%. Oh yeah. No, that's a that's a tough one. I think I'll I'll have to, you know, slide that one over into the second spot. I know I'm going to regret this in a in a second here because there's going to be a bunch of different companies that are way more undervalued.

[00:13:01]Hopefully we get like Shopify. Apple, fantastic. Love that. Uh not a big fan of Apple. I think they trade pretty rich in terms of valuation. Albeit they have been reacelerating revenue growth recently which is a very very positive development. But I fundamentally don't believe that a cyclical business which is what Apple is should trade at close to 40 times earnings. That's just the reality of it. I think shares are overvalued but they're always going to be overvalued just because Apple trades at a premium. That's just how it is.

[00:13:27]Nonetheless, it like I don't think it's that attractive of an investment. I haven't thought of it as being that attractive of an investment for a very long time. I'm going to slide this into nine. Kind of re leave room on both sides there. Moving on here. Let us see.

[00:13:38]Salesforce. This is terrible and tragic for me because that's a very undervalued business, but I cannot place it at number one. Um, again, I would probably place this somewhere middle of the pack, maybe ahead of Mastercard before Service Now, something something in that ballpark. Let us nonetheless take a look because I actually haven't looked at Salesforce financials in a while. There has been a pretty material slowdown in terms of revenue growth at this business for the past little while. Um, we should probably look at this actually on a stockbased comp adjusted price to free cash flow ratio. Quite the mouthful there. The reason we do this, by the way, is because a lot of these software companies, they collect their revenues upfront at the start of the year. So you charging on like an annual plan, uh you get all the cash flows on January 1st, for example, for services to be provided throughout the year. But on an income statement basis, those revenues are recognized over the next four quarters.

[00:14:24]So the cash has entered the business, but on GAAP accounting, you can't really recognize those revenues, right? one of the many flaws of GAAP accounting. But at the same time, when you are looking at free cash flows, uh we do want to exclude out stockbased compensation because that is a real expense of the business. Anyways, with that being said, even a free cash flow basis, this is excluding stockbased comp. It's trading at 15 times cash flow. And that's for a business that, you know, revenue growth should be in the double digits. That's what they've outlined. That's what management has outlined. Organic revenue growth, by the way. And then you add a little bit of buybacks, a little bit of margin expansion. So you're actually looking at, you know, under a one times PEG ratio. Um, unfortunately I can't in good faith put that at number one. And I'm doing that uh out of the scaredness that I'm going to get like an Adobe or like an Uber, FICO, Zeta, something like that, and I'll plop one of those into number one. So, very unfortunately, I'm going to have to put Salesforce into eight. Um, in truth, if this wasn't a blind ranking, which kind of defeats the purpose of the video, I would probably plop it, you know, fourish, three-ish, something like that. Let us see. Give me Shopify. Apploving. Jesus Christ. Um, okay. So, Apploven I am going to put into number one. Um, and I'll kind of run you through this. I'm actually working on a super deep dive on Apploven. It is one of the most interesting businesses I've seen ever.

[00:15:33]Period. Like they have so much optionality it's ridiculous. The current business on a valuation basis on a gap PE basis is trading at 40 times trailing earnings and they're growing revenues at like 60%. Which is just psychotic. It's a it's a company with 80% operating margins by the way. They have 400 employees on the core business. Makes them one of the most efficient businesses just period in the world. And then they have like this structural advantage in terms of the fact that they charge for performance and their Axon 2 advertising model is way better than any of the competition out there. And so they're able to serve ads much better.

[00:16:04]They're starting to get into all these different categories when it comes to, you know, e-commerce is something that they've recently done. Over on the earnings call, they outline how they're starting to get into like potentially looking at insurance, food delivery, and like fintech and all these different categories. And so you've just got to imagine that that will be massive for the business. This could this a business only doing $5 billion of revenue. They have runway to get to like 50 and they might even accelerate revenue growth beyond this point once they kind of open the platform. I think they outlined that in June they're going to open the platform to all advertisers, not just gaming and e-commerce, right? So 40 times earnings for a business growing way north of that like 50 60% revenue growth. I think I'm very happy with this at number one and I'm glad I didn't put Salesforce at number one. Excuse me, total revenue growth of only 50%. Uh but uh the segment revenue growth of the software business that is growing a little bit faster. So quite quite happy with that at number one. And our final business instantly over into 10. Let us see into it. Ah uh I do think intuitit's probably undervalued especially after the recent drop. But I'm a little bit worried with the growth that they outlined. I was talking about this on Twitter. That's funny. It's down 20% exactly on the day. Um I was talking about this a little bit over on Twitter and I got quite a lot of flack for it.

[00:17:11]But um the simple truth of the matter is that the growth of the business de accelerated from 18% to 10% in the span of one quarter. And this was largely off the back of uh the Turboax stuff. And they quite literally like uh Turboax is one of their strongest businesses because it has I think it's the highest margin part of their business. It is seasonal, but like on an operating income basis accounts for I think maybe 30% of operating income. I might have that num number wrong so don't quote me on that, but I think it accounts for 30% of operating profits which is you know for a smaller segment. It's much higher margin. So it's it's pretty important part of the business. And so they literally came out on the earnings call and talked about the pricing pressure.

[00:17:46]And I think in a different quote I wasn't able to find it. They mentioned how I think the units declined or something or they expect that the units will decline. Point is the business is not doing too hot. And whether it's AI or whether it's something else, uh the fundamentals are deteriorating and I don't love that. Would I place it at number 10? No. Point is though, like when you look at the valuation on this business, it's probably not as cheap as it implies because the fundamentals are also deteriorating alongside uh the the declining PE ratio. Speaking of that PE ratio, it is now trading at 18 times PE on even a free cash flow basis. Wow, look at that. 15 times EV to free cash flow. So it is it is really really cheap. Um but again for a business that is probably on a going forward basis growing at call it 10% in a little bit.

[00:18:28]Add on free cash flow margin expansion, add on some buybacks and stuff like that. Maybe more aggressive buybacks. I don't love it, but I don't hate it.

[00:18:35]Again, probably wouldn't rank it at number 10. With that being said, thank you very much for watching. If you like this sort of video, I have two more for you to watch. This one is an update on my favorite super investors like Bill Aman, Warren Buffett, Devantara, and Terry Smith, who has had a disastrous couple of years, what they bought and sold within the most recent 13 apps. And then this one right here is an update on Adobe, which I know a lot of you care about. So feel free to check that out if you haven't already. Thank you very much for watching and have a great