No need for that condescending tone. In fact, thinking about stocks in terms of their valuation only is overly simplistic - not thinking of asset prices in terms of supply and demand.
And no, also in the long term asset prices do not necessarily approach their dcf value. Just look at gold for the most obvious example.
Trying to bring us back on topic, maybe @CashFlow, you could share some companies you are looking at/investing in and give a bit of narrative on what you find attractive about them?
Maybe question your primer that stocks are are a completely different type of assets, free from any irrational market behaviour.
Anyways, i am logging out of this discussion for the sake of my mental wellbeing.
Actually, exercise for the reader:
HubSpot (HUBS) is a growing company. Model out their P&L and create a DCF valuation.
Is that a software from the 2020s? A thing you could buy on subscription with the promise of being up to date forever while providing eternal ARR for the company selling it?
I think it was called Sash. Or Saaf. Sass. That’s it. Sassy? Sash. Ah SaaS! Software as a Scam.
FWIW. I asked AI to value for me and it came up with:
** TOTAL ENTERPRISE VALUE: $26,051 Million **
— Sensitivity to Discount Rate (WACC) —
WACC 10%: $32,927M
WACC 11%: $29,104M
WACC 12%: $26,050M
WACC 13%: $23,557M
WACC 14%: $21,482M
Which is plausible. The lowest is about 70% higher than current enterprise value.
Ah, yes, I knew there was someone who would focus us back on the topic!
Oh wait, I could just share some of my recent buys and talk my book …? Please buy them also and drive up the price already!
My highest conviction ones YTD are below.
Prudential Financial Inc.
Prudential is just a bet on the ‘Silver Tsunami’—the math of Baby Boomers being financially locked into retirement products for life. If you actually run a DCF, the value isn’t in some growth fantasy; it’s in the Adjusted Book Value and a dividend that’s been hiked for 18 years straight. The market is so obsessed with the credit cycle that it’s basically giving you PGIM (their $1.4T asset manager) at a massive discount. You’re getting paid a ~5.8% yield to sit and wait while the stock trades for less than the assets on the books. It’s a boring, cash-heavy machine that people are ignoring because it doesn’t make for an exciting headline.
Altria
Altria is the ultimate litmus test for whether someone actually understands cash flow or just follows headlines. If you run a DCF, you’ll see the market is pricing in a total collapse that the numbers just don’t support; they’ve raised the dividend for 50+ years because their pricing power outpaces volume declines every single time.
You’re essentially buying a ~6.5% yield that’s backed by a record ~$5.4 in free cash flow per share and a management team that just retired 14% of the float over the last decade. The ‘smoke-free’ pivot with NJOY and “on!” is an optionality play, but the real thesis is the relentless $8 billion they return to shareholders annually. People are so busy worrying about the end of smoking that they’re missing the fact that you’re buying a perpetual cash machine at a 30% discount to its intrinsic value. It’s the kind of ‘hated’ stock that makes for a terrible cocktail party conversation but a legendary portfolio stabilizer.
Those are the two I bought and that I would feel comfortable buying today. Please hide your disappointment about the lack of geopolitical or AI angles or that both are very boring. Both are undervalued and attractive and I’m willing to bet my entire … online account on this forum that both will still be around in ten years.
There you have it!
No, seriously, these are companies I own—Prudential with an average entry price of about $85, Altria with an average entry price of about $40—and that I added to as recently as this year.
No arguments from me for those picks.
I’ve been buying MO since 2018, but prefer a lower price.
Also, BTI which was my biggest position for a while which I bought at sub-$30 prices.
Managed to buy IMB at 1250 and Japan Tobacco at 2365.
I’d like lower prices before buying tobacco again.
I also don’t agree with you that these are perpetual dividends stocks. I value them only for 10 years of cashflow (as a safety measure). Younger generations should be getting healthier and I fear sales eventually falling.
PRU I had my eye on for a while but only started buying in 2021. I would be happy to buy now, but prefer to wait for better value.
Cleaned.
For those interested in PRU and other insurers, there’s an interesting odd lots podcast where they interviewed a state regulator.
He’s been sounding the alarm that many insurance companies have been bought up by private equity who are using them as a captive buyer for their products. On top of that, they have shifted to low regulation jursidictions and transferred liabilities without a corresponding amount of assets which could lead to a massive blow-up in the future.
Portfolio down >1% again today. The most annoying thing is that everything is down except for the 3 stocks which I wanted to buy today (CRM, GDDY, HUBS) which are up around 5% 
How is my SAASpocalypse adventure going?
| Ticker | Change |
|---|---|
| CRM | -0.6% |
| GDDY | -9.6% |
| FDS | -8.6% |
| ACN | 4.5% |
| IT | 11.7% |
| RELX | 16.9% |
| MORN | 16.8% |
| ADP | 7.2% |
| TRI | 28.0% |
| HUBS | -0.1% |
Note that top 3 were already pre-existing holdings so a large chunk of the loss is attributable to pre-casaastrophe purchases.
(and yes, I still bought the 3 stocks I’d planned even though they’d gone up 5% on the day just to spite me)
EDIT: saw this article on PE looking at SAAS as a target.
Is anyone taking profits from the recent spike in oil prices? I bought a couple of CL futures expiring in May a few days ago.
Not trying to get into politics here, but my guess is that prices could keep rising for a while (likely over 100?), since the situation doesn’t seem to be resolved anytime soon
My plan last year was to buy oil stocks this year, but I was too slow and now I find the prices unattractive.
SIX:BAER Anyone?
Wait, where are you getting the 20-year increase from? Looking at the chart, they started in 2010, but then there’s a cut in 2013 and it stayed flat in 2014. It looks like it’s been flat again since 2022 too.
I’m curious what currencies and markets they’re actually operating in?
That ‘safe haven’ bit is funny though, considering the mess they’ve been in. They lost like CHF 600m on Benko/Signa alone. Then there’s the FIFA/Venezuela laundering stuff, the FINMA fines, and that whole ban on acquisitions because they couldn’t get their compliance right. They were even part of the Malaysia $4.5bn heist. Throw in billions in frozen Russian assets and you can see they’re pretty deep into some high-risk stuff.
May I suggest some VONN instead? Same type of dividend yield but probably less risky based on @Beate ‘s answer.
16 years. One cut, nothing since, despite all the chaos in the past.
That was at least one CEO before. I don’t have much intel but they seem to be reorienting with the new management. Will need to do my due diligence.
