We are the closest we’ve ever come to thinking that Nike is an interesting long position. New CEO Elliott Hill is making all the right noises, although the journey to get Nike back to greatness is going to be difficult and painful. The valuation is starting to offer a decent risk/reward profile, but is patience still required here? And what would the success factors be for the turnaround?
Adobe has a market-leading position in creative software suites and document handling tools, giving it an excellent platform to introduce AI enhancements. With extensive R&D in the space, is there growth to show of it? Or has the valuation multiple simply been unrealistic, creating a potential opportunity after substantial underperformance vs. the index in 2024?
Lululemon started life as a Yoga brand. These days, it looks more like an early-stage Nike, with new product launches targeting various sports. They also have a growing men’s range, as well as an enviable global expansion track record. Lululemon is a force to be reckoned with, but that’s why it trades at such high multiples. With the share price having turned the corner after a tough year, is there still an opportunity to climb in?
Walmart is the biggest name in retail. They know how to move with the times, with an eCommerce strategy that is starting to really blossom. The market loves what it sees, with Walmart trading at much higher multiples than its long-term averages. Then again, when delivering growth with such consistency, where is the limit for this valuation? And is there a pairs trade in this sector as well?
Intuit owns software-as-a-service platforms that are a feature of so many small businesses. QuickBooks and MailChimp are common choices for accounting and mailing list solutions, while TurboTax has a huge customer base in the US across personal and business users. There are other businesses like Credit Karma, aimed at personal finance users. These are decent businesses in isolation, but can Intuit find ways to make them more valuable by being together in the same group? Or are they simply paying lip service to synergies and AI enhancements?
Disney is looking healthier these days and the share price has responded positively. Aside from improvements in streaming, they've had two major box office hits in 2024 - is this the dawn of a new creative era at Disney, or will the old mistakes slip back in?
Amazon has been a story of a platform business blossoming into profitability after a period of extensive investment. With a formidable moat in both eCommerce and cloud, along with a valuation multiple below major peers, is Amazon becoming one of the better Magnificent 7 opportunities?
Microsoft is the OG when it comes to enterprise computing. As mature as the business is, there are still plenty of growth drivers – especially when it comes to AI, with Microsoft at the forefront of this trend across offerings like OpenAI and Copilot. Even Bing is somehow managing to increase in popularity thanks to AI! Behind all this excitement lies an important reality: the data centre investment cycle is very different to the software-as-a-service predictability that Microsoft investors are accustomed to. Will this impact the valuation over time?
UPS delivers – but not always for investors. In fact, the long-term track record of returns is poor. This is a tactical stock rather than one you want to hold for a long time, so the cyclical nature of the stock is important to understand. With the all-important fourth quarter just around the corner, is there an opportunity to take advantage of signs of a recovery?
Netflix has everything going its way right now, from hit shows to great financial results. The market loves the story and has signed up for a full season of growth, paying high multiples once more for a company that was thrown to the wayside just a couple of years ago. Can the good times continue, or will the multiple prove to be too hot?
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