My presentation on Joby Aviation and Alphabet last week
As longtime readers know, I co-host the Value Investing Seminar in Italy every year...
My friend Ciccio Azzollini and I held it last week in Trani – our 21st year doing it! I saw some interesting stock ideas and presentations, which I'll share with readers here in my daily e-mails.
Today, I'll start with the highlights from my own 30-minute presentation at the seminar (you can see all of my slides right here).
I started my presentation by reviewing the advice I gave at the seminar last July. As you can see, my macro conclusion that "it's not time to get defensive" was correct, as the S&P 500 Index rose 12%:
And overall, my picks did very well – nearly doubling the market's return:
I also highlighted two stocks I pitched at the seminar a few years ago – Meta Platforms (META), up more than 300%... and Netflix (NFLX), up nearly 600%:
I then shared two of my current favorite stock ideas, starting with air-taxi company Joby Aviation (JOBY)...
I still think this stock is a "promising speculation," despite its 90% run-up since I pitched it a year ago. (I had actually shared my presentation on Joby seven months earlier in my January 18, 2024 and January 19, 2024 e-mails.)
After reviewing my theory about "Catching a Particular Type of Moonshot: Market-Leading Companies in Sexy, Exciting Sectors That Appeal to the Media and Retail Investors," I shared an update on Joby:
My second idea will be even more familiar to my regular readers: Alphabet (GOOGL).
I didn't have enough time to present a full analysis of the company, so instead I shared the recent five-year stock performance of five members of the "Magnificent Seven" mega-caps. Note that I excluded Nvidia (NVDA) because it's a chipmaker and growth has been so extreme, as well as Tesla (TSLA) because it's in a totally different business.
Here's the slide:
As you can see, Alphabet is in the middle of the pack, and well above the S&P 500's return. Meta was the top performer (after crashing the hardest in 2022). And Amazon (AMZN), another one of my favorites, has been a laggard.
I then showed the 10-year growth of each of these five companies. I highlighted that Apple (AAPL) is the outlier, with no growth in the past three and a half years:
Despite no growth, Apple trades at about 30 times this year's earnings estimates... while Alphabet's multiple is at about 19 times, despite strong growth. That's a major reason why I like Alphabet's stock much more than Apple's.
Here's the slide I shared:
I also highlighted that Alphabet includes a "free call option" with its autonomous driving unit, Waymo.
Regular readers might recall this "Heard on the Street" column in the Wall Street Journal, Tesla's Robotaxi Launch Shows Google's Waymo Is Worth More Than $45 Billion, which I shared in my June 27 e-mail. I also shared it in my presentation at the seminar when highlighting the point about Waymo. Here's an excerpt:
Tesla's (TSLA) long-awaited robotaxi service has finally hit the road. But rather than help justify the electric-car maker's sky-high valuation, it really highlights how underappreciated Google-parent Alphabet might be for its own, much more advanced self-driving venture...
Tesla has to start somewhere. But the launch also serves as a reminder of how much road remains between it and Waymo. The robotaxi service, majority-owned by Alphabet, started service in Atlanta this week. That makes five cities served by a fleet of over 1,500 autonomous vehicles in total. Waymo plans to more than double that fleet by the end of next year, thanks to a new manufacturing facility in Arizona.
And as the column continues, "investors are on board":
Waymo raised $5.6 billion in a late-stage funding round last year. That deal valued Waymo at $45 billion, which put it among the 10 most-valuable, venture-backed companies that haven't yet gone public, according to data from PitchBook.
Some Wall Street analysts covering Alphabet have higher estimates now, given Waymo's strong lead in the robotaxi service market and a partnership with Uber that is expected to boost usage. Josh Beck of Raymond James put a "base case" valuation of Waymo around $150 billion in a report last month. He projects the company's gross bookings will average 129% growth annually for the next five years.
Overall, I'm still bullish on Alphabet.
Looking ahead to my future e-mails, stay tuned for other ideas I heard at the seminar!
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.