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0:00Today, we are diving into three stocks
0:01that analysts are saying to buy and
0:03three stocks that analysts are saying to
0:05sell. And a couple of these will
0:07genuinely surprise you. One of the sells
0:10is actually up a huge 45% this year, but
0:14analysts think it may have run a little
0:16too far. Another is a famous rocket ship
0:19company that's burning cash faster than
0:22it can bring in. Some of these are
0:23quiet, boring money makers. Others are
0:27red hot and risky. So, let's get
0:29straight down the line. One quick note
0:31before we start. These buy and sell
0:33calls come from Morningstar's analysts.
0:36And I want to be really clear up front.
0:38These are not my picks. I'm never here
0:41to give any stock picks. What we're here
0:43to do is to teach a process. My job
0:46today is to break down what the analysts
0:48are saying and then run each one through
0:50our own process so you can see how we
0:53would check their work and also to teach
0:55you how to apply that process to your
0:57own investing. So, first, a stock that
0:59analysts are saying to buy. S&P Global.
1:02You might not know the name, but you
1:04definitely know its work. It's the
1:05company behind the famous S&P 500 index
1:09and it's one of the biggest providers of
1:11credit ratings and financial data in the
1:14entire world. Its stock is actually down
1:16about 8% this year, though part of that
1:19is simply because it spun off one of its
1:21businesses and handed those shares to
1:23its new owners. So, the real business
1:25has actually held up better than that
1:27number alone makes it look. So, guys,
1:30here's S&P Global today. Now, we're
1:32going to go through the bull and bear
1:33cases. As a reminder, when you have our
1:36software, you have to All you do for the
1:38bull and bear cases is you click down
1:40here at our Ask AI, see bull and bear
1:42cases, minimize, and they'll pop up in
1:4530 seconds. So, here's the bull case,
1:48business stuff only. S&P Global has had
1:51an incredibly deep moat. When a company
1:53wants to borrow money by issuing bonds,
1:56it almost always needs a credit rating
1:59and S&P is one of just a few trusted
2:01names that provide them. On top of that,
2:04it collects a small fee every time
2:06someone builds an investment product
2:08around the S&P 500. And with trillions
2:11of dollars tied to that index, it's a
2:14quiet toll booth on the entire market,
2:16no matter where it goes. It's a
2:18wonderfully sticky and repeatable
2:20business. In fact, it's really four
2:22businesses in one. Credit ratings,
2:25financial data and analytics, stock
2:27market indexes, and energy and commodity
2:29information. So, it earns money from
2:32many corners of the financial world all
2:34at once. And once a bank or investor
2:37builds its daily work around S&P's data,
2:39switching to someone else is a real pain
2:42in the ass. Now, here's something that
2:44most people miss as well.
2:46A business like this needs very little
2:48money to grow. It doesn't need factories
2:50or warehouses. It's just data, it's
2:53people, and it's trusted name. So, more
2:55of what it earns can flow right back
2:57into its owners at the end of the day
2:59because of how low capital it needs to
3:02operate. Now, what's the bear case?
3:05Well, its rating business rises and
3:06falls with how much debt companies are
3:08issuing. So, high interest rates can
3:10really slow it down. And over time,
3:13cheaper AI-powered data providers could
3:16chip away at its pricing power. Still,
3:19replacing a trusted rating agency isn't
3:21something the financial world does very
3:23quickly. So, let's run the numbers and
3:25see if the analysts are right. So, guys,
3:27remember, when it comes to the price of
3:28the company, I don't look at the ticker
3:30price. I look at the market cap. And the
3:33price of this business is $134 billion.
3:36That buys every share in the market in
3:38full.
3:39The next thing I do, I look at the
3:41enterprise value.
3:43So, the market cap is 134 billion, the
3:45enterprise value is 156 billion. That
3:47difference of 22 billion dollars is
3:49essentially their net debt. Now, sounds
3:52like a lot, but we've got to compare it
3:53to the cash flow.
3:55Cash flow last year was 5.5 billion. The
3:585-year average was 4 billion. So,
4:00really, it's not that bad. It's selling
4:02for about four times it's last year's
4:04free cash flow.
4:06And that's including all the debt and
4:08taking their cash and paying down that
4:10debt. So all in all, it seems like they
4:12can afford this debt probably pretty
4:14manageably. Now, we'll see later in the
4:16pillar what their long-term debt is
4:18compared to their cash flow. Next.
4:21Guys, returns on capital. The 5-year
4:23number is 15%. The 1-year's only 8%. So
4:27that's kind of like a hey, why is it
4:28dropping so much? It's based on
4:30operating income, so maybe their
4:31operating income has fallen. Next.
4:34They're selling for 24 times free cash
4:36flow and 27 times earnings. So their
4:39free cash flow last year and over the 5
4:42years is actually higher than their net
4:43income, which I like seeing. It's a very
4:45rare occurrence when that happens. But
4:48this 24 and 27, it's a little frothy.
4:51Doesn't mean it's too expensive.
4:52Remember, one number and one metric in
4:54and of itself is not a good idea of
4:57saying this is good or this is bad.
4:59Because if this company can grow its
5:00cash flow at 30, 40% a year for several
5:03years, this is cheap. But that's the
5:06question we have to find out. Now, in
5:08terms of profit,
5:10the 1-year profit margin is about 30 and
5:121/2%. Their 10-year's 29 and 1/2. Their
5:145-year's 28. So it seems pretty
5:17consistent in the high 20s. So I like
5:19seeing that, but this number is what I
5:21love.
5:22Their high gross profit of 71%. Now,
5:24what confuses me is this.
5:27What this high gross profit means is
5:28every dollar they add of revenue, a lot
5:31of it's going to go to profit. But with
5:33this high number, why is their profit
5:34margin not consistently going up as
5:36their revenue continues to climb? Cuz
5:38the revenue is climbing very
5:40consistently here.
5:41Very, very consistently. So I'm a little
5:43confused by all of this. And for those
5:46of you love a dividend,
5:48it pays about a 0.9% dividend, which
5:50eats up only a billion dollars of their
5:51cash flow. Now, our community members
5:53have this company as a buy right now.
5:56So let's check out the eight pillars.
5:57Well, guys, here are the eight pillars.
5:59We've got an X at our 5-year free cash
6:01flow number, which we discussed, but
6:03everything else is a check. And they're
6:05buying back shares here. Now remember,
6:07buying back shares people love, but it
6:09doesn't necessarily make it a good thing
6:11if they're paying an overvalued price.
6:14That's something that a lot of people
6:15miss when it comes to share repurchases.
6:18It's only good if the shares are
6:19undervalued.
6:21Now guys, I threw a lot of data at you.
6:24Remember, I'm here to make this as
6:25simple as possible. If you hear or see
6:28me write or send anything that's a
6:29little confusing, write it in the
6:31comments below so we know to address it.
6:33And also, to make it easy for you, I
6:35have an absolutely free special PDF for
6:38you. It includes two major things. One,
6:40it's going to explain all these key
6:42metrics to you, how they're calculated
6:44and what they mean. And second, it's
6:46going to go through all six of these
6:48companies for you in the PDF. This is an
6:50over 20-page PDF. So if you want that
6:53thorough analysis done by us, click the
6:55link below in the description. It'll be
6:57emailed to you. You can download it in a
6:59matter of seconds.
7:00So, let's see what analysts think about
7:03this company. So right now, analysts
7:05have the profit this year finishing
7:07around $18 per share, growing to 27 over
7:10the next 4 years. So it's some good
7:12double-digit growth overall.
7:14As for revenue, very consistent but
7:17slow. So a drop of 3% this year, 5%, 7%,
7:215 and 1/2, 5.3. Now I will say,
7:25rates are going up like we mentioned
7:26before. So if companies are borrowing
7:28less and less, less business for them.
7:30And if you believe that the stock
7:32market's overvalued, a bad bear market
7:34in these next three or four years might
7:35hurt the revenue a little bit. In fact,
7:37just to show you, this is going back to
7:39the dot-com era. '96, '97, '98, '99,
7:442000, 2001. Look at the revenues
7:46absolutely skyrocket. Over a 40%
7:49increase in a matter of 4 years. And
7:51then stagnation for a little bit.
7:54Not as much growth,
7:56but it's still growing nonetheless.
7:58So guys, we have some story.
8:01We have some numbers. Our job now is to
8:04make assumptions about the company
8:06and then determine what the right price
8:08to pay is not including the balance
8:09sheet. Now guys, the reason the stock
8:12analyzer tool is so important is
8:14if you're like me back in the day, I
8:16didn't know what the ticker price meant.
8:18This helps you put it all together. And
8:21if you don't know where to start, we
8:23have help me make assumptions now. It's
8:24going to walk you through every single
8:26line here and ask you questions to help
8:29guide your assumptions on stock
8:30analyzer. As you get better at it,
8:32you'll need that less and less. But I
8:34made here my a 10-year analysis on S&P
8:38Global. First off, I did revenue growth
8:41of 3, 5, and 7% per year. Not a ton.
8:45Next, guys, I'm focusing here on free
8:48cash flow, but I'm going to keep them
8:49both the same with profit margin. I like
8:51the fact that free cash flow is higher.
8:53So I put 30, 32, and 34% profit margin
8:57and free cash flow margin. Next
8:59question, what PE and price to free cash
9:02flow would I assign to this company 10
9:04years from now? Well, guys, there's some
9:06questions to ask.
9:07Do they have a lot of growth potential?
9:08Not really. Do they have a moat? I would
9:11say they have a pretty big moat. S&P
9:13500, S&P Global overall, great moat.
9:17Do they have good returns on capital?
9:19Yeah, they do, but they're declining,
9:21but they just got rid of a business, so
9:22that might be part of it cuz their
9:23operating income fell. So what PE would
9:25I assign to this business compared to
9:27the S&P 500? I don't care what the PE is
9:30right now. What I care about is
9:32the historical average for the S&P is 15
9:35to 17. Is this company better or worse
9:38than the average company in the S&P? I
9:40think better. Now before I wrote 14, 18,
9:42and 22, I'm actually going to change
9:44this. I'm going to go 15, 19,
9:4815, 18, and 21.
9:50And then finally,
9:52what return do I want? Now guys, for the
9:54intention of teaching, I want to show
9:56people what's the value of the business.
9:59So I put in the historical market market
10:01return of 9 and 1/2%. Keep in mind, this
10:03is not the price I want to pay and not
10:05the return I want. I advise people all
10:07the time, this is my opinion, that if
10:09you want to buy an individual stock, you
10:11need a higher return than the market
10:13return.
10:14If not, then we'll just buy a low-cost
10:16S&P 500 ETF and just roll with it. Why
10:20spend all the hassle and time of sitting
10:23here and buying an individual company?
10:24So, I put in my no margin of safety 9
10:26and 1/2% return.
10:28I hit the analyze button.
10:30The stock price is 453. I have a low
10:33price of 240, a high price of 460, and a
10:37middle price of 335.
10:39Now, what does this mean? Well, guys, if
10:41our middle assumptions occur,
10:43then I'll make about a 5 and 1/2%
10:45discounted cash flow return. If my low
10:47assumptions occur, about 1.2. If my
10:49highest assumptions occur, I'm looking
10:51at a 9.6% return. So, you've got to ask
10:54yourself,
10:55is this worth it to make 9.6% assuming
10:59what my best assumptions were? But, of
11:00course, you have to sit there and run
11:02the numbers yourself.
11:03Also, we added something here.
11:06This is going to show you, based on your
11:09assumptions, what the revenue and profit
11:11would be 10 years from now. So, this is
11:13one way of keeping an idea of like,
11:15"Hey, what seems realistic or not?"
11:17Because a lot of people put 30% in and
11:19then they'll see the fact the company 10
11:20years from now has to do, you know, 10
11:22times more sales. Not realistic. All
11:24right. Now, the first stock that
11:26analysts are saying to sell, SpaceX,
11:29Elon Musk's rocket and satellite giant,
11:32which recently went public. If you
11:34watched our SpaceX videos back when it
11:36went public, you know how deep we've
11:38gone on this one. And if you haven't,
11:39they're right here on the channel. So,
11:41check it out after this video. The stock
11:43is up about 9% from its IPO price, but
11:47it's well below the high it hit right
11:49after it listed. So, why are analysts
11:51saying to sell? So, let's be fair and
11:53start with the bull case because it's
11:55jaw-dropping. SpaceX is years ahead of
11:58everyone in reusable rockets, and its
12:00Starlink satellite internet network is a
12:02powerful, extremely hard to copy
12:05business with millions of customers and
12:08big government contracts. It's also
12:10building Starship, a massive
12:12next-generation rocket, and it's folded
12:15in an AI arm with products like Grok.
12:17So, even if above some of these giants
12:19bets pay off, the upside is enormous.
12:23But, here's the bear case, and it's the
12:24whole reason that analysts are cautious.
12:27SpaceX is spending staggering amounts of
12:30money building rockets, launching
12:32thousands of satellites, and now pushing
12:34aggressively into AI. It's actually
12:37spending more than it brings in. The AI
12:39push is the riskiest piece because the
12:41technology and the economics there can
12:44shift incredibly fast. And when a
12:47company spends more than it makes, that
12:49money has to come from somewhere. It's
12:51either
12:52borrowing from investors or selling
12:54shares from about to investors. So, it
12:56either hurts the balance sheet or dilute
12:58shareholders. So, if you're shareholder
13:00currently and they start issuing more
13:02shares, your slice of that pie gets
13:04smaller and smaller. It's like having a
13:05pizza with eight slices, and then they
13:07say, "You know what? We need more
13:09shares." They cut the slices in more.
13:11Your piece got a lot smaller. Now, guys,
13:14I want to remember remind you that a
13:16brilliant company can still be a risky
13:18stock if it's betting the farm on a
13:20dozen expensive things all at the same
13:22time. And guys, the market's great, so
13:24raising capital is probably a lot
13:25easier. But, what if we have a bear
13:27market? And at SpaceX's valuation and
13:30market cap, you're buying into very high
13:34expectations. And ex- expectations that
13:36high leave very little room for anyone
13:39to stumble. So, let's analyze it. So,
13:42guys, SpaceX is a $1.85 trillion market
13:45cap. Good balance sheet though cuz only
13:47$1.83 trillion in terms of enterprise
13:49value. So, more cash on hand than debt
13:52as of right now. Guys, everything else
13:54is garbage. It loses money, it loses
13:57free cash flow, it's it it has no
13:59profit. I don't even know how to look at
14:01this without saying, "You've got to base
14:03this on some sort of other metric." The
14:06metric I suggest is price-to-sales
14:08ratio. It's currently 58.
14:11Just to keep in perspective, let's go to
14:13a company like Microsoft, which is
14:15large, highly profitable,
14:18and they're selling for 12 times the
14:20sales, which is still kind of frothy for
14:23them cuz they're also selling for for 30
14:26times earnings. But, let's go back to
14:28SpaceX and I want to talk about a few
14:29other things here as to why I'm
14:30concerned about that.
14:32In order to justify this, their sales
14:35have to skyrocket, and they're doing
14:37better and better. But, to get to the 12
14:39times sales that Microsoft is at, it
14:43would need to do if if if current market
14:45cap is 1.85 trillion,
14:49you need to divide that by 12, it's
14:51about $150 billion in sales. So, they
14:54have to 5x from here to get the same
14:56valuation. Now, with that said, you're
14:59probably like, "Well, Paul, that's not
15:00fair. Microsoft is very mature."
15:02Absolutely. Microsoft is very mature.
15:05Some would argue though that Microsoft's
15:07maturity would justify a higher
15:09valuation than a company that has a lot
15:10of risk potential, even though the
15:12growth is there. The question is, where
15:14do you stand on that? And guys, this is
15:16exactly why I teach on YouTube cuz the
15:18story of SpaceX is phenomenal. The
15:21numbers, I can't make heads or tails of
15:23it. Do I think SpaceX is amazing? Yes.
15:25Do I think they're doing amazing things?
15:27Yes. But, can I determine over the next
15:2910 years what the company will be
15:31making?
15:33I can't. And for that reason, it's very
15:36difficult for me to make an idea of what
15:38the company is worth. But, let's go see
15:39what analysts are thinking about the
15:40company.
15:42Analysts have a company making $4.20
15:45in 2 years.
15:47I'm going to go ahead and say probably
15:49not. And there's a wide range here.
15:5214 analysts have a range of 13 cents to
15:54$7.76.
15:56Even with the highest of ranges, if you
15:58multiply a 25 PE, which is aggressive
16:01for any company, you're still looking at
16:04$200 per share. Not bad. That's assuming
16:07no dilution. That's assuming the balance
16:09sheet stays the same. And it's assumed
16:11they have to sit there and keep on and
16:13get the profitability. It's a lot to
16:15assume for the next 3 years. And look at
16:17their revenue. They do have revenue
16:18closing the year out at 43 billion and
16:21getting to 185 billion in 2028. Guys,
16:25I want to remind you,
16:28this is an amazing amazing company what
16:30they're trying to do, but it's okay to
16:32say I don't get how they're going to
16:33make money quite yet. You might sit
16:35there and say, "Well, I'll miss out."
16:36Guys, there's tens of thousands of
16:38stocks out there to find. I'm trying to
16:40encourage you to find caution and sit
16:42there and be ready when you find the
16:44company that makes a sense of the
16:45pricing. Guys, there will be a day when
16:47you can understand SpaceX profitability.
16:49I don't think that's today. Now,
16:51back to the analyst buy list.
16:53Intercontinental Exchange, usually just
16:55called ICE. Not that ICE. It owns
16:58something that you've absolutely heard
17:00of, the New York Stock Exchange, along
17:02with a bunch of other major exchanges,
17:05clearing houses, and even mortgage
17:07software. Its stock is roughly flat this
17:09year, which for a steady compounder is
17:11less boring than it sounds. If the
17:13business keeps growing while the price
17:15sits still, the stock can actually get
17:17cheaper compared to what it earns. So,
17:20what's the bull case? Well, ICE owns the
17:22plumbing that the whole financial world
17:24runs on. Once banks and traders build
17:27their entire business around an
17:28exchange, they almost never leave. The
17:31switching costs are enormous and more
17:33traders create more activity, which
17:35pulls in even more traders. That's a
17:37beautiful self-reinforcing loop. Plus,
17:41steady recurring money from selling data
17:43and software on top of all that. Its
17:45clearing houses also sit right in the
17:47middle of enormous financial trades
17:50making sure both sides actually get
17:52paid. A role that's essential and
17:54heavily protected by regulation, which
17:56keeps new competitors out. That mix of
17:59scale, habit, and regulation is about as
18:02strong a moat as you'll find anywhere.
18:04And when we have a strong moat, we give
18:06them a premium to the company. And
18:08notice how it makes money. ICE gets paid
18:11more when markets are busy and wild, but
18:13its data and software keep paying even
18:16when things are quiet. That's a nice
18:18minimum cushion. Because remember, we
18:20have been in a wild bull market lately.
18:23So, if we enter suddenly a bear market,
18:25you have to ask the question, how much
18:27will their revenue be affected? Now, a
18:29bear case, one piece of advice, its
18:31mortgage software business is tied to
18:33the ups and downs of the housing market,
18:35which can slow way down when interest
18:37rates are high. And where are interest
18:39rates right now?
18:41Regulators could one day lean on the
18:42fees it charges for trading and data,
18:45but at its core, this is a
18:46mission-critical infrastructure that's
18:48very tough to replace. So, let's run it
18:51our everything money way.
18:53This is an $90 billion market cap
18:55business. Now, guys,
18:57one thing I don't like here, market cap
18:59is $90 billion.
19:01Look at the enterprise value here, $230
19:04billion. Now, my hope is that a lot of
19:06this money is money they owe to people
19:08in the short run that they're holding
19:09cash for. That could be the case, but
19:12that's a lot of that's a lot of
19:13enterprise value. It's $140 billion of
19:17debt. And guys, guess what? They only
19:19make $4 billion a year in free cash
19:21flow. That's a really high number. I'm
19:23immediately going to skip right to it
19:26and see the eight pillars. So, a lot of
19:29it is um short-term debt. Let's go to
19:32the balance sheet. So, of their total
19:34liabilities of $144 billion, only $24
19:37billion is long-term. But, when you're
19:39only generating $3.8 to $4 billion a
19:41year, it's still a high multiple on
19:43their debt. So, I think one of the key
19:45components here is to understand their
19:47debt. Not only that, their $3.9 billion
19:50in free cash flow, they pay out $1.1
19:52billion of that in dividends. So, if you
19:55have $24 billion Here's why I get
19:56concerned about debt. I want to explain
19:58this.
19:59We're in a higher interest rate
20:00environment that might be getting worse.
20:02My question I'm actually ask AI right
20:03now. I'm going to ask them, what is the
20:06average rate on ICE's long-term debt and
20:11average maturity date? So, what I'm
20:14asking here is
20:15I want to know how soon are they going
20:17to have to start refinancing debts.
20:19Because if they're imminent and their
20:20average rate is very low, so like let's
20:22say they have to they have to refinance
20:24next 2 years and their average rate is
20:255% cuz they locked it in years ago. Like
20:27let's say for example, they have to
20:29refinance their debt in 2 years and
20:30their average rate is 4 and 1/2 or 5%
20:33cuz they took it years ago. They're
20:35going to have a big drop in their cash
20:36flow. So, as of December 31st, 2025, the
20:40average Oh my gosh, weighted cost of
20:423.7% and a weighted average maturity of
20:4414 years. Okay, so
20:47they have a long way to go. They have 14
20:49years before they have to average on
20:51average refinance their debt. But guys,
20:52look at that 3.7%.
20:55Let's say instead of 14 years, it was
20:561.4 years. You better believe that
20:59rate's going to 5 and 1/2 or whatever
21:01percent and they're going to all of a
21:02sudden lose another half billion dollars
21:05a year in cash flow. That's some of the
21:07stuff that I'm teaching on this channel
21:08to help you go forward. Oh, another
21:10thing I want to mention. Look at these
21:12terrible returns on capital here. 7% and
21:146%. That is no bueno.
21:18Yes, they have a low debt rate of 3.7%,
21:21but they're barely making it on their
21:23returns on capital. So, it's not leaving
21:24much for shareholders. So, let me
21:26explain that to you.
21:28Cuz this is a really important, but
21:30often misunderstood metric. When you
21:32start a business, you can borrow money
21:34or you can take investors, which is
21:35equity.
21:36Each one requires a return.
21:38If you're borrowing money, let's say
21:40they require 6% return on debt. Right
21:42now they're at 3.7 here, but let's say
21:43it's 6% and let's say as an investor,
21:46you want a 10% return.
21:48Well,
21:49the average of that, let's say it was
21:5150% debt and 50% equity, would be 8%.
21:54So, if you need overall to provide an 8%
21:57return overall to cover your 6% with
21:59debt and 10% to your investors,
22:01this is saying they're not making that.
22:04So, they're not making enough money to
22:05be able to pay off their investors.
22:07That's what's called that they're not
22:08making economic profit. That is not a
22:11good thing. You don't want that. So, I'm
22:13already sitting here looking at this
22:14going,
22:15"Man, this one's already a tough one
22:17which you have to buy dirt cheap based
22:18on its returns on capital and a lot of
22:21debt." Like I'm already kind of like
22:22hesitant on this one. But, so let's see
22:24what the eight pillars look like.
22:26So, shares outstanding are up slightly,
22:28returns on capital suck, long-term debt
22:30is high. Yes, the revenue, net income,
22:32and profit, and cash flow are up, but
22:34everything else is an X, and it's giving
22:36it's leaving me an uneasy feeling going
22:38like this doesn't worry me so much, but
22:40I look at it going they're going to have
22:41to figure out a way to get I mean
22:43they're paying these dividends. I don't
22:44know. It's just a tough one for me.
22:46Let's see what analysts think.
22:49Analysts have profit growing pretty
22:51decent, 17%, 9%, 12, 12, and 14%.
22:57That's pretty solid. Pretty solid. Now,
22:59what's the stock price right now? 158.
23:03So, in 4 years,
23:05if they're able to sell for I mean the
23:07returns on capital are bad. 15 times
23:09this, you're looking at a $200 stock.
23:12Not much upside potential and a lot of
23:15debt. And for revenue, bleh.
23:1911% growth, 5.5 and 1/2, 6 and 1/2, 8,
23:22and 6. So, mid-single digits. So, guys,
23:26again, here we are running the stock
23:28analyzer tool. So, guys, I've never done
23:31ICE before. I'm going to sit here and do
23:32this live right now. So, first off, for
23:35revenue growth, I'm going to go 3, 5,
23:37and 7% for the next 10 years. I'm doing
23:40a 10-year analysis. For profit margin
23:42and free cash flow, they seem to be
23:43around each other, uh but free cash flow
23:46seems to be consistently higher, but
23:48it's slightly getting worse. I don't
23:49know if that's a trend or not, but I'm
23:51going to sit here and put 26, 28, and
23:5430. Now, you might be like, "Well, Paul,
23:55that's like really low." I get it. It
23:58could be, or it could be spot-on. I just
24:00I'm not going to give this company based
24:02on a lot of things here much much more
24:04credit. Now,
24:06what PE would I assign to this company
24:0810 years from now? Well, guys, they have
24:10a good moat in the sense of like it's
24:12hard to switch from them,
24:14but these returns on capital are
24:15terrible. Like
24:17and they have a lot of debt on them. I
24:19look at this going I'm going to go low
24:21for my personal opinion. I'm going to go
24:2312, 15, and 18.
24:26And then, of course, my 9 and 1/2
24:28percent return. Now, guys, again, we
24:30need margin of safety on these
24:32companies. So, let's hit the analyze
24:33button. The stock is currently at 160.
24:37Oh, boy.
24:38I have a low price of 80,
24:40a high price of 160, actually, and a
24:43middle price of 115. It's actually not
24:45as bad as I would have thought. I would
24:47have thought it'd be much worse than
24:48this, but it's not that bad. But, for
24:50me, to buy a company like this,
24:53I would need a really, really high
24:54return cuz I just don't like that debt,
24:56and I don't like those low returns on
24:57capital. Now, next on the analyst sell
25:00list, Robinhood, the popular app that
25:02made free stock trading famous and now
25:05offers crypto, options, retirement
25:08accounts, and even banking. Its stock is
25:11down about 16% this year. And to be
25:13fair, now the bull case is real.
25:15Robinhood is trying to grow from a
25:17simple trading app into a full financial
25:20home for its users, adding banking,
25:22credit cards, and retirement products
25:24that keep customers around longer and
25:27bring in steadier, more reliable money.
25:30It's also signed up millions of paying
25:32gold members, and it's going after young
25:34investors early. The idea is that
25:36someone who opens an account at 25 could
25:39still be a customer at 60. The more of
25:41your financial life that live inside
25:43Robinhood, the stickier you become. But,
25:46here's the bear case and why analysts
25:48have put it on the sell list. Robinhood
25:50still leans heavily on trading,
25:52especially the risky stuff like options,
25:55crypto, and betting markets. When
25:57markets get boring or scary,
25:59people simply trade less, and
26:02Robinhood's income can swing hard from
26:04one quarter to the next without any
26:06warning. And in the constant threat of
26:08new regulation on these products, you've
26:10got a business that can be a real roller
26:13coaster ride. So, when you add a
26:14business that swings that hard, it's
26:16really, really tough to value because
26:18you never quite know what a normal year
26:21looks like. But, remember, a shaky
26:23business can still be a buy at the right
26:25price, and a great one can be a bad buy
26:27at the wrong price. So, let's see what
26:29the numbers say for Robinhood. I'm going
26:31to pull it up here in our software. I
26:34believe the ticker is Hood. It is. $87
26:36billion market cap, $118 billion
26:39enterprise value. All right, guys. Some
26:41other things. Return on capital, really
26:43solid. 28% this last year, but the
26:465-year is only 2.28%.
26:48Guys, it's expensive. It's selling for a
26:50P. Now, here's the thing about the P. If
26:52you look at this, their 1-year net
26:54income is 2.07 billion. Their 1-year
26:57free cash flow is only 219 million. We
26:59got to understand why that's so
27:01different. That's a huge, huge
27:03difference. Let's go to our AI and ask.
27:06Why is the net income for the last 12
27:09months so much higher than the free cash
27:12flow?
27:14So, this is going to tell me why that
27:16is, cuz I'm sitting here going like,
27:17that's always a red flag to me. But,
27:18what's interesting is their 5-year free
27:20cash flow is 630 million, while their
27:235-year net income is only 180. So, they
27:25have far more free cash flow average for
27:27the last 5 years than they do net
27:29income. Now, guys, one big benefit of
27:31this company is
27:3281% gross margin. That means every
27:35trade, every transaction that happens,
27:3781% of it is going to the bottom line.
27:39And look at this revenue growth. 24% a
27:41year for the last 5 years. Actually
27:43higher in the last three, 43.5% per
27:46year. This company is growing like
27:48crazy. I wonder how many customers they
27:49have. Let's find that out. How many
27:52Let's find this out. How many accounts
27:54does Robinhood
27:57have with customers by year
28:01going back to 2021.
28:03So, I want to see what is their growth
28:05been over the last 5 years on customer
28:07growth. That's going to tell me is it
28:08slowing, getting faster? But, I want to
28:10remind everybody, Robinhood's the place
28:12that a lot of people have gone to to
28:13basically gamble in terms of investing.
28:16It's not really investing, it's
28:17speculation. So,
28:20Oh, I'm actually surprised by this.
28:22I thought it'd be higher. 22.7, 23
28:25million, 23.4, 25.2, 27 million dollars.
28:29Now,
28:30what's the
28:32average account size?
28:35So, this is going to tell me, okay, are
28:36they are the account size growing? Is it
28:39cuz of the bull market? Is it cuz people
28:40are adding money? These are assumptions.
28:42We can't get exactly the number, but we
28:43can look at it and say, "Okay, what are
28:45the metrics here that are going?" So,
28:47using Robinhood's latest reported
28:48figures, I found 384 billion in total
28:51platform assets. So, the average is
28:53about 13,400 per funded customer.
28:56Okay, that's a
28:58Can you tell me the average size by year
29:01going back to 2021?
29:04So, it told me right now
29:06as of August 31st at 13,400 per funded
29:09customer.
29:10Now, I'm trying to find out what is it
29:11per year going back to 2021 to see cuz
29:14if the market's up from 2021 and now
29:17almost triple.
29:18Let's see. Oh, wow, look at this. Look
29:21at this. 4,300 dropped to 2,700. Makes
29:24sense why we had a bear market in 2022.
29:28Back to 4,300, 7,600, 11,930, and then
29:31recently it was at
29:3313,400.
29:35So,
29:37these guys are probably in riskier
29:38assets. So, my guess is if we have a
29:39bear market, the the funds are going to
29:41fall harder than that. Now, let's check
29:44out the eight pillars here.
29:46Ugly.
29:47Low overall debt, like we said before. I
29:50think it's a little bit higher than
29:51that.
29:52Um but we have high price of free cash
29:54flow, high PE, crappy returns on capital
29:57for 5 years, but the 1 year is good.
29:59Shares outstanding are up. So, they're
30:01issuing new shares, which makes I don't
30:03like the fact they're doing that, but it
30:04happens. But their revenue, cash flow,
30:06and profit are up. So, that's great. Um
30:09let's check out analyst estimates. I
30:11don't think they're as optimistic here
30:13in the future.
30:14220 growing to 444, then dropping to 375
30:18per share in 2030, and revenue growing
30:21from 5.3 billion to 9.14.
30:24All right. So, let's go to our stock
30:25analyzer tool and make our assumptions.
30:28Now guys, I want to repeat.
30:30It's very difficult for new companies,
30:32especially companies like Robinhood.
30:34Hood. there's a lot of people watching
30:35that have Robin Hood accounts. It tends
30:37to be more speculative person in Robin
30:39Hood. So, if there's a bear market, it's
30:41going to hurt them more.
30:42So, I'm being a little bit more
30:44conservative.
30:45I put 5, 9, and 14% revenue growth for
30:48the next 10 years.
30:50I did 20, 30, and 40% profit margin.
30:52Guys, I still think that's a lot.
30:55But,
30:56with 81% gross margin, as they add more
30:59money in there and do more transactions
31:00happen, it can go higher. They did 42%
31:03last year. But again, if we have a bear
31:05market, I have to assume we're going to
31:06have some sort of bear market in in the
31:08next 10 years, it might be longer than
31:10people would like, and it might keep
31:12some people away for a while.
31:14Next, my PE I put 15, 18, 21, and then
31:17again, I put in my 9 and 1/2% market
31:20return. So, we hit the analyze button.
31:23The stock's currently at $95 a share.
31:26I have a low price of 19, high price
31:28about 92, and a middle price of 42. So,
31:31for me, I'm just
31:33I just got to weigh it out. And to be
31:34honest with you, I have to do more
31:35research on Robin Hood to understand the
31:38financials, how they're getting
31:39customers, what their customers cost to
31:41get, the profit and free cash flow being
31:43so different. I've really got to
31:44understand that more. And now, guys, a
31:46reminder,
31:48never take our title or thumbnail
31:49literally. We're never here to give a
31:51stock tip. We are here to teach a
31:54process that you can one day take and
31:56apply to your own investments. And
31:58remember, these buys and sells are what
32:00the analysts are saying, not me. I'm
32:02just here to break them down and check
32:04their work. I actually do agree with
32:06analysts here on Robin Hood being a
32:08sell.
32:09Now, the last stock that analysts are
32:10saying to buy is Alliant Energy. And
32:13this one is about as boring as it gets,
32:15which is honestly kind of the point.
32:17It's a regulated electric and gas
32:19utility serving homes and businesses in
32:21Iowa and Wisconsin. Its stock is up
32:23about 10% this year. Now, normally a
32:26utility like this grows very slowly. But
32:29here's the exciting twist. The bull
32:31cases, all those hungry, power-hungry AI
32:34data centers need need enormous amounts
32:37of electricity, and utilities like
32:39Alliant are first in line to provide it.
32:41Management expects electricity demand in
32:43its area to jump 60% by 2031. For a
32:47steady utility, that could mean years of
32:49surprisingly fast growth. Here's how
32:52utility company actually makes money.
32:54Regulators allow it to earn a set
32:56approved profit on the money it invests
32:58in power plants and power lines. So, the
33:00more it needs to build to serve those
33:02data centers, the bigger its earning
33:04base can grow. The data center boom
33:07doesn't just bring more customers. It
33:09grows the base Alliant gets to earn on
33:11as long as management executes. What's
33:13the bear case? Well, to serve all that
33:15new demand, Alliant has to spend huge
33:18amounts of money upfront building power
33:20plants and upgrading the grid long
33:22before any of that money comes back in.
33:25If regulators won't let it recover those
33:26costs, or if those big data center
33:28projects get delayed, the payoff could
33:31end up a smaller amount than hoped.
33:33Utilities also carry a ton of debt. So,
33:36higher interest rates make every new
33:38project more expensive to finance. And
33:40if those data centers end up using less
33:42power than expected, Alliant could be
33:44stuck with plant it built for customers
33:46who never fully showed up. Now, guys,
33:49one thing I want to say here.
33:52I always tell people I don't do banks, I
33:54don't do insurance, I don't do
33:55utilities. So, for this company, this is
33:57what I really want to teach you. It's
33:59not about chasing every stock as an
34:01opportunity. It's about understanding
34:03what you understand what you don't
34:04understand.
34:05I don't understand utilities. I'm out. I
34:07don't like the world of being like, "Oh,
34:09it's regulated. The more money you
34:11spend, the more money you can make."
34:12Where is the incentive then to spend
34:13less money? So, for me, I am moving on
34:16from Alliant Energy, not even spending
34:18time on it. I will find another company
34:20that I like. Now, the third sell
34:24and the final stock that analysts are
34:25saying Garmin, the maker of GPS watches,
34:29fitness trackers, and navigation gear
34:31for hiking, cycling, flying, and
34:33boating. And here's the catch that lands
34:35it on the analyst sell list. The stock
34:37has been absolutely on fire, up roughly
34:4045% this year. The bull case is very
34:43strong. Garmin is beloved by serious
34:46athletes and pilots for its rugged,
34:48super accurate devices and great battery
34:51life. And it's nicely spread across
34:53fitness, aviation, and marine. So, it's
34:55not relying on just one product to carry
34:57it. Its aviation and marine gear, in
35:00particular, sells at premium prices to
35:02customers who truly depend on it. Pilots
35:05and boaters don't swap out trusted gear
35:07on a whim. Garmin also builds most of
35:09its own products in its own factories,
35:12which gives it tight control over
35:13quality.
35:14But, here's what has analysts worried.
35:16Garmin is up against giants like Apple
35:18and Samsung, whose smartwatches plug
35:21right into your phone and keep getting
35:23better at fitness and health tracking
35:24every single year. As those cheaper
35:27do-everything watches keep improving,
35:29Garmin could slowly lose its more casual
35:31customers, leaving it with only the
35:33hardcore enthusiasts. And remember, when
35:35a stock has climbed this fast, a lot of
35:38good news is already probably baked into
35:39it. That means Garmin doesn't just have
35:42to do well from here. It has to do even
35:44better than people already expect. So,
35:46let's run it one last time. So, guys,
35:49before we get into Garmin, I thought
35:52that Garmin was powering Apple Maps. So,
35:55I went to our AI and I asked it the
35:57question. And AI said, "No, Garmin
35:59doesn't power Apple." So, then I
36:00thought, "Okay, if the if they can lose
36:02the consumer part of their business, how
36:04big is that?" So, I asked, "What percent
36:07of Garmin's revenue comes from casual
36:08consumers versus pilots and boats?"
36:11Guys, fitness and outdoors, mostly
36:13consumer products, about 61%. Aviation
36:16and marine, about 30%. And auto OEM,
36:19which means the car kind of GPS and all
36:21that stuff, is 9%. So, that 61% is a big
36:25chunk of their business that Yeah, I see
36:27a lot of people wearing Apple products
36:28all the all the way around. So, I get
36:30the concern there in the bear market
36:32pitch for that. So, let's continue
36:34direct God, I love that AI tool. It's so
36:36incredible just be able to ask that
36:37question right in the software.
36:39So, guys, it's a $55 billion market cap
36:42business with basically the same
36:43enterprise value. Check mark, check
36:45mark, check mark, check mark. That is
36:46awesome. Essentially means they have
36:48very little debt. They generated 1.6
36:51billion in free cash flow last year,
36:521.07 a year for the last 5 years,
36:55selling for 35 times free cash flow.
36:58Good returns on capital, not amazing,
37:00but good, 11% a year for the last five,
37:02but getting better, 13.6 for the last 1
37:05year.
37:06And profit margin slightly higher than
37:08the 5 and 10-year average last year, 24
37:10and 1/2% last year versus the 22 and
37:131/2% for the last 5 and 10. So,
37:15understanding why is it suddenly jump
37:18from 22 and 1/2 to 24 and 1/2? That's a
37:20big question to ask. Another thing I
37:22love,
37:23very little in acquisitions, only 376
37:26million for the last 5 years, and really
37:29great growth rate. So, there's a lot of
37:31great stuff happening here, guys. I'm
37:33going to actually ask the question,
37:35how much has their
37:37consumer
37:39products business grown by year for the
37:42last
37:445 years. Like, I want to see, are they
37:46growing their consumer products or are
37:47they declining or is just the growth
37:49rate declining? This is really important
37:51if that's part of the bear case.
37:52Whenever you guys see a bear case,
37:55dig in some more questions. Remember,
37:56investing is simple, not easy. It's
37:59simple to sit there and say, "Okay,
38:00well, what's the next question to ask?"
38:02What And over time, as you watch more
38:04videos and get more acclimated to the
38:05software, you will see that happening.
38:08So, we had 28% growth in 2021, a drop of
38:138% in '22, increase of 6% '23, and 18%.
38:18So, it's still growing, but the question
38:20is, is it growing enough or is Apple
38:22growing Who knows if they're really
38:23losing? Is it growing because of
38:25pricing? I don't know. These are the
38:26questions to ask overall here. So, let's
38:29go check out the eight pillars on
38:31Garmin.
38:33Shares outstanding are basically even,
38:34I'm ignoring that. It's only here on the
38:365-year PE and 5-year price to free cash
38:38flow. As we said, debt was low, revenue
38:41is up, net income is up, cash flow is
38:42up, ROIC. So, guys, let's go now to
38:45analyst estimates. Not much in terms of
38:48seeing what's here.
38:49They have growth in profit
38:51double digits and revenue growth. Wow,
38:54look at this, 13.5%, 12.5%, 11%. So,
38:57pretty high growth rate for the next 2
38:59years, but not many analysts following
39:01them. Only five here. So, we're here.
39:04Let's go put our own stock analyzer tool
39:05spin on it. All right, guys, and I did a
39:07few things different. We saw ample
39:10revenue growth for the next 2 years. I
39:12only put 3, 6, and 9% for Garmin for the
39:15next 10 years, assuming Apple gets more
39:17ingrained in people's lives. Next, I got
39:19rid of profit margin because it's a lot
39:21higher than the free cash flow, and
39:23whenever free cash flow, I always revert
39:25to free cash flow as my go-to. That's
39:27the lifeblood of the business. It's the
39:28harder number to manipulate and change.
39:31So, I put 17, 18.5%,
39:34free cash flow based on their history
39:36here. Next, their PE 10 years from now.
39:39Guys, they are the leaders in their boat
39:42and aviation category, but in terms of
39:44wearable, they're not necessarily the
39:46leader. So, and they have decent returns
39:48on capital, but not insanely crazy. So,
39:50I'm putting in 15, 18, and 21. I still
39:53think the company, because of their
39:54balance sheet, is a better-than-average
39:57company in the S&P. And finally, my 9.5%
40:01return. Now, as you can see,
40:04guys, I've made some pretty reasonable
40:05assumptions on Garmin and some of the
40:07other ones we've done here, and that's
40:09something you can easily learn to do
40:11with our stock analyzer tool to save you
40:13hours and money. This is why you need
40:16it. What you just watched me do on
40:18Garmin
40:19took a minute, minute and a half, and it
40:21told me more about the stock than most
40:22people will ever know before they buy
40:24it. Most investors would just look at
40:26the price, read a headline or two, and
40:29made a decision based on that. But guys,
40:32that's how you buy a stock and then feel
40:33sick to your stomach when it drops
40:35because you never really knew what it
40:37was worth in the first place. We see a
40:39stock price. Haven't you ever wondered,
40:41what does that mean? That's what caused
40:43me to change my investment. I said,
40:45"Well, what does that stock price mean?"
40:47The stock analyzer tool is what answered
40:49that question for me. I'm putting in
40:51smart assumptions about a company's
40:53growth and cash flow. You'll put into
40:55the same thing and it's going to show
40:57you the price where you actually get the
40:59return you're looking for based on your
41:01assumptions, the number that actually
41:02means something. Guys, we've heard from
41:04so many of our software and community
41:06members and once they became a part of
41:08the community, they made a lot less
41:10emotional decisions because they had
41:12numbers to back them up and people to
41:14help them. They drastically decreased
41:16the buying on hype and hoping for the
41:18best. They know what they own, they know
41:20what they paid and they know why. That's
41:23what it feels like to sleep well at
41:24night no matter what the market is
41:25doing. And here's the thing. You just
41:28saw how simple it is. If I can do it
41:30live right here in a couple minutes, you
41:32can do it, too. You don't need a math
41:33degree, you don't need a finance degree,
41:35you just need the right tool and it's
41:37right here for you. So guys, my question
41:39to you is, what would you be willing to
41:40pay to have peace of mind, to know what
41:43a stock price means, to know what you
41:44want to pay for a company, to have
41:46better understanding and to save you
41:48time and money. If your answer is over a
41:50dollar a day, which I'm sure it is, then
41:52you're in luck. We have a 7-day trial
41:54for $7. Click the link below, get full
41:56access, run Garmin, run whatever stock
41:59you want, as many as you want for the
42:01next 7 days and I assure you you will
42:03fall in love. So,
42:05here is what my assumptions showed me. I
42:07hit the analyze button.
42:09Garmin is currently
42:11at $288 per share. I have a low price of
42:15100, high price of 228, a middle price
42:18of 150. Yeah, I agree with analysts. I'm
42:21out for that reason. So, that's what the
42:22analysts are saying. And now you've seen
42:25how we check their work. Whether you
42:26agree with them or not or agree with me
42:27or not, it's up to you. The That's the
42:30whole point. You don't need anyone
42:32else's stock tips once you know how to
42:34check a business yourself. And if you're
42:36hunting for real bargains right now, you
42:38have got to see this next video. I
42:40honestly can't believe that some of
42:41these stocks are selling at such cheap
42:44prices. It came out yesterday, so it's
42:46ready and waiting for you. Go click
42:48right here on your screen. Thank you for
42:49your time.

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