7x P/E, 10% Growth, Big Buyback | Deep Dive
An industry leader with excellent management and net cash
The setup:
Trades for 7x P/E
Has net cash
Grew EPS at 17% p.a. since 2019; I expect 15% going forward
Is the industry leader and gaining market share
Excellent CEO and CFO who bought back 23% of the diluted share count in the last two years
Announced another 8% buyback last month
I have owned this stock since 2012, and it is up 20x since then. I think it can 3x again in the next three years.
Why does this opportunity exist?
Investors still misunderstand the business model and the company’s competitive advantage. I even see investors write Long theses that make this mistake.
The company is also facing temporary macro headwinds, which it has faced several times since 2012. That means EPS will be lower this year, but I expect it to bounce straight back the year after.
This writeup is built on primary research — many interviews since 2012 with management, employees, competitors, and customers. Only paid subscribers receive the writeup, which includes:
The competitive advantage investors don’t understand
Why there is a long growth runway ahead
Valuation scenarios over three years
The catalyst: a competitor being bought out at a substantial premium
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