Transcription
We have finished a rather mixed week on the stock market, with on one hand companies that have been able to resume growth in their share price. We have IBM which is up 15%, Palo Alto +12%, we even have Sales Force which is finally picking up a little with +5%, Adobe with +7, almost 8% and even Fortinet with +16%. And on the other hand, we have some giants that are struggling to advance. Amazon is falling, Google is falling, or even Mastercard is falling. In this video, we will talk about several events that happened this week. We will talk about gold, which has surpassed US Treasuries in global store of value reserves. We also have the Korean market, which erased 345 billion dollars in one day. It's been a while since that happened. So we will see what the consequences of this are and if it could be dangerous for the future. Is it too late to invest in Korean indices? And we will finish with the usual, a small tier list of opportunities that potentially exist right now, despite the fact that the markets are still quite high. Are there still opportunities that we can seize? So we will start here with the US dollar. Gold has surpassed US Treasury bonds as the main global reserve asset. The last time a similar event occurred was in 1996, if my memory serves me well. And generally, it's not necessarily a good sign. It shows a kind of loss of confidence in the dollar. Now, there is a major clarification to be made, which is that a good part of this asset reserve is due to unrealized gains, given that since 2023, gold has indeed exploded. If gold had not exploded since 2023, if it had remained at the same price, then we would not have had this surpassing. We would still have been below in terms of reserve asset. But with the rise, the significant rise we've seen in gold, especially since 2024, it has caused the value of gold held as reserves to surpass that of Treasury bonds. Is this bad for the American economy? Not necessarily, but on the other hand, it mainly means that today, we are in a phase where more and more reserves are being accumulated. This is also problematic for gold cycles. Be careful not to get caught. It's not now, when gold has exploded, that you should buy. You should generally buy it when things are going well, when you don't want to hold gold. And so, be careful with these false movements; it's more about investor behavior that can be dangerous. Now, it also shows once again that holding dollars, holding euros, holding currencies is not a good idea because they are losing value anyway. It's almost one of the only things that is globally certain today, which is that if you hold currencies in the long term, they lose value due to inflation and also due to high monetary printing. We now move on to the Korean market, which fell by almost 8 to 9% in a single day. That's over 345 billion dollars erased. And we see companies like Samsung losing 7% in a day, SKX down 8-9% in a day. So what happened? Well, quite simply, the market had been overheating for a while. If you look at the CPI index for some time, since the beginning of the year, it has gained 90%, in 1 year it has gained 190%, and in 5 years, about 151%. So it's mainly over the last year that it has really exploded. And so, what's happening? Given that Koreans are particular because it's not the first time this has happened in history, but Koreans are very particular about this because they don't invest much. They invest mainly in structured products and things like that, and when Korean markets suddenly explode, they go completely crazy. It's FOMO, but like never seen before, where they will pledge their restaurants, pledge their houses, resell advance retirement insurance, life insurance, etc., to invest in the index. A large portion invested at the highest levels, and so, inevitably, at some point, the sky doesn't go up forever, and at some point, when you're overheating, you're overheating, and the markets need to cool down. That's why we have volatility spikes like this, or losing 10% in a day. So it's quite, quite enormous. So you have to be careful. Obviously, it's not something that will necessarily be dramatic. Perhaps the markets will rebound, and some will be able to buy the dip. But personally, I prefer to stay away from markets that rise like this. When we have curves like this, where in one year you gain almost 200%, that's not the kind of thing I want to see. I want to buy when it's at this level, when nobody is talking about it, when nobody wants to put their money here. That's generally where we can really seek performance and where we won't take risks. Now, this kind of movement, when you're a trader and you invest in the short term, in momentum and all that, yes, there's potentially something to do. But when you're a long-term investor like me, with positions you want to keep for 5, 10, 15, 20, 30 years, there's no point in trying to chase this kind of thing because it's more of a pitfall than anything else, and the probabilities are absolutely not in your favor when investing in such things long-term. And I repeat, long-term. In the short term, well, if you're good, if you're capable of entering and exiting at the right time, if you have enough time and, well, guts to stay in the markets and stay in front of your screens to analyze this, to enter, to have the right entry points, good exit points, why not, but that's a profession, and unfortunately, many people improvise as traders, thinking they have the skills to be traders when they don't. So, I prefer not to mess with that. I prefer to invest long-term. That's why I don't touch that. And typically, it's a mistake I see far too often: being interested in a market when it explodes and absolutely not being interested in markets that are falling. So, really, be careful about that. We will now move on to the tier list. We will start with Hermes. Where can we place Hermes? It has evolved a lot recently. The stock price since the beginning of the year has lost about 13-14%. We are around €1600 today. Yet, it is a very, very high-quality company. We can see that overall revenue is growing. Recently, growth has slowed down, but historically it's above 10%. For earnings per share, it's the same. Debt is negative. There is a net debt to EBITDA that is negative. This means there is more cash than debt. This is a good thing. Margins are high. They went from 32% 10 years ago to over 41% today. They continue to increase despite the slowdown in growth, and profitability is very good. We have ROCE which went from 23 to 31%. We were slightly above 10 years ago, but it shows that the company invests its cash well, invests its money well. So that's a good thing, but today, at what multiple is Hermes valued despite the significant drop we've seen since the beginning of the year and also over the last year? [grunt] It's still trading at 37 times earnings, 38 times free cash flow. Now, some will tell me, "Yes, but Guillaume, look at the last 10 years, it's almost the lowest level. We only had 2018 where it dropped to 35 times. If we look over 20 years, we start to have many more moments where we were at 37 or below 37 times. The problem is that people only look over 5 or 10 years. However, as soon as you go back a little further, you realize that it's not the first time in history that we've had such low valuation levels, with doubts about the cyclicality of the luxury model. Because for 5-10 years, we've imagined that luxury is not cyclical at all and that it's breaking all the rules of the economy. So, be careful about that. 37 times earnings is still expensive for a company growing at 15% per year, it's a bit expensive, but it can be more or less understood depending on the regularity of growth. But for a company that is stagnating or where it's very uncertain how much it will grow, it's expensive. It's very, very expensive by comparison. We'll see just after with Microsoft or Meta, which are growing faster but are valued less expensively. And so, this is a significant premium to pay for such low growth, and moreover, we've already seen this in history. So, don't forget to always check what happened in the past before making a decision, because far too many people tell me, "Well, look, it's not expensive. Anyway, it was at 2500 a year ago, it will necessarily go up, it's a great company, etc." However, these people who say it's a great company never open, they never open the income statements, the balance sheets of the company. They know it sells Birkins, that it's a luxury brand, but they are incapable of saying how many times they pay earnings. So, be careful with this kind of thing. So, if we take this, we have 37 times earnings. If we value this, we have a net profit of approximately 52 billion 279 million. If we estimate an earnings per share growth of 8% per year and a price-to-earnings ratio of 30, we would get 7% per year. This gives us a fair value of €1200. Well, €1260, let's say €1300. It would need to drop another 20% for it to interest me and for me to consider perhaps adding Hermes to my portfolio. Now, one could say that we won't have 8% earnings per share growth. We will be much more positive. Let's say it will be 13%. In that case, if we imagine that earnings per share will grow by 13% per year over the next 5 years, then at €1570, we are at a fair value, so today at around €1600, we would be at perfectly acceptable levels to start a position in Hermes. It all depends on the estimation of growth that you aim for. Now, I never go above 30 here for the P/E ratio I aim for. Some are more comfortable above 30. I'm not comfortable with that, and it hasn't really hurt me. My portfolio has generated a little over 25% per year. So far this year, without any semiconductor stocks, we are a little over 17% performance. So it doesn't bother me, and it hasn't hurt me to be very conservative on the P/E ratios I aim for. Here, I find that 30 is not ultra conservative. If we were more conservative, we would have put 23. Here, we would have put 10 points of this growth. But well, that's too conservative, I think, for a company like Hermes. I think there will always be a premium on the market for it, given Hermes' structure and the image it has. But I find that 13% doesn't leave enough margin of safety. For me, with margins of safety, we are at 8% growth estimation, which means it's still too expensive. So I will put it in B. In B, I put it in the middle. That is to say, it's not bad. It's a very good company. Unfortunately, it's still a bit too expensive. We will move on to Faiko. Faiko also had a rather difficult start to the year, even though it has been recovering well recently. In the last 3 months, or rather in the last month, we've had a nice recovery with +7-8%. At one point, we were even at +20%. Since the beginning of the year, we are at -17% for a company that, however, has accelerating growth. Okay, we are in the opposite case of slowing growth. Here, we have Faiko, accelerating growth, earnings per share increasing by 25% per year for 10 years, 18% per year for 5 years, and now re-accelerating to 30%. Free cash flow is re-accelerating. Debt is generally at the limit. Okay, it's three times EBITDA, so it's really the limit of the limit. They took on debt this year to buy back shares. Given that they considered their shares to be really cheap, they wanted to do even more. We have exceptional free cash flow margins. We went from 21% to 38%, and profitability is enormous, it's off the charts. So that's something very good. In terms of valuation, we are paying 36 times earnings, 30 times free cash flow. So we are still paying a significant premium for the company. It's 30 times free cash flow. If we look at the, well, not the last 20 years because the business model changed in 2016-17. So let's look from 2016, when it was a new business model, and since then, it has already traded below 30 times earnings. On average, it has traded at 35 times. Here, I will also not be comfortable paying more than 30 times earnings for my estimates. So, if we look at this, if we have free cash flow growing by 20% per year and we aim for a price-to-free cash flow of 25, okay? Below 30, so really well below. We end up with a fair value of $1300 to make 15% per year. So $1300 is if we want to make 13% per year, but at the current price of $1166, we would make about 15% per year. So [grunt] it's still a good valuation for the company. Now, if we think we won't achieve 20% free cash flow growth per year, but rather 15%, then that gives us a fair value of $1000, and in that case, we would be slightly expensive here. So for me, Faiko, I did a complete analysis, I think, on the YouTube channel. So go watch it if you want more details on the business model, what it's really worth, what's behind it, and whether the business is really in danger with the arrival of competition or not. As a reminder, competition arrived about a year ago, and in the year that competition arrived, Faiko had its best year. Okay? They had their best growth in a long time, even though we were supposed to be in a year where competition would start to show that things would go badly for Faiko, and that now that they are in competition, people will go for the advantage score instead of keeping the FC score. Well, no, they were still able to increase their prices, they still increased the average basket per customer, and on top of that, they achieved, I believe, over 30% earnings per share growth, which is completely crazy. So, for me, Faiko, I will place it in A. I don't put it in S because it remains a very good opportunity, but the margins of safety are not yet high enough to deserve to be in S, but it represents very interesting prices. We move on to Amazon, which is often seen on this channel. It's a company I appreciate enormously. It's potentially one of my favorite companies in the world right now. We have revenue growth that is accelerating. Okay, so that's a good thing, and it's re-accelerating. We're talking about a company that has $742 billion in revenue, and they are still growing at double digits, over 10% per year, and on top of that, they are re-accelerating. So that's quite exceptional. Earnings per share are re-accelerating compared to 5 years ago. So that's a very, very good thing. Debt is still well managed. Margins are increasing. In the last quarter, we reached 13% operating margin for the first time. So a nice increase in margins over 10 years, we went from 3% to 13%. And profitability is increasing well here, and we've reached a ROCE of a little over 15% in the last quarter. So to value this, given that they are in this capex war with all the Magnificent 7, we will focus on cash from operations, which is $148 billion. So if we take this, which is $148 billion, with a 15% annual growth in cash from operations and a price-to-operating cash flow of 17, we would have a fair value of $256. So we would be at the fair value today to make 13% per year. So that seems quite correct in terms of price. It's not the opportunity of the century, but it's quite correct in terms of price. If we look at the price-to-operating cash flow, we are currently at 18. This means we estimate that the company's valuation will decrease. The 10-year median is 21, the 20-year median is 21. The 30-year median is 23. So by aiming for 17, we are quite conservative on this. If we aim for 23, as we have had so far, we would make about 20% per year. Now, as I say, margins of safety are the most important thing when investing in the stock market. And so, with good margins of safety, we have a fair value around $250 for me. So Amazon, I will place it with Faiko. It's a correct opportunity. It's not the opportunity of the century, but it's a perfectly correct opportunity. SK Inx, we will do Micron at the same time. We will tackle both of them directly. So, SK Inx, what does it look like? For SK Inx, we have magnificent growth. Here, over 5 days, we are growing. Despite the fact that it dropped by almost [throat clearing] almost 10% in one day, we are still up over 5 days. So that puts into perspective what happened during the day. We have very strong growth that is re-accelerating incredibly. Earnings per share are the same. Margins are very good and accelerating nicely, they have more than doubled. Profitability is also increasing. There is a lot of capex, of course, but it is decreasing compared to operating cash flow. What will be a problem for me with SKNX is, first, the cyclicality of the company, even if overall it holds up quite well, we have a nice upward trend, but it's especially visible in net earnings per share, where the cyclicality is truly terrible. This is exactly what I don't want to see, what I don't enjoy investing in, because well, what tells you that next year we won't be in the same situation as here? We had it here in 2018, and the following year was after records. We had it similarly here in 2010. So what tells you that in 2025 it won't be the same? Now you'll tell me, "Yes, but there's the order book and all that." Go look at the conference calls from 2018. Go look at the conference calls from 2010. The order books were there. In 2010, the order books were there because of the arrival of smartphones. In 2018, the order books were there because of electric cars and massive investments in cars, electric vehicles. So all of this was needed. And so now, with AI, we have the same thing. Each time we've had peaks like this, it has fallen sharply. So for these reasons, I don't touch it. So SKNX, for me, is directly in the trash for this reason. I don't believe in these stories of super cycles and all that. Maybe the cycle will last another 2-3 years. Maybe. I just prefer not to play this game, given that I'm not confident, given that I won't sleep well with the company, given that I'm not confident in holding the company for 10 years in my portfolio, closing my screen, sleeping for 10 years, and coming back, I'm not confident with that. So I prefer to put it in the trash, whereas for example, with Amazon, I am confident in going to sleep and in 10 years having a much better company than today. For SKX, I don't know, I wouldn't know what cycle we'll be in in 10 years. I wouldn't know where we'll be in 10 years. So it goes in the trash. And for Micron, the conclusion will be more or less the same. I made a complete video on the channel about Micron as well, about what I thought of the company and why it was going out. But generally, when I say out, it means trash. It's generally the same. If we look at earnings per share, it's completely irregular. And for this one, I backtested, I checked the conference calls in 2018, the conference calls in 2022, the conference calls in 2010, and each time the management had absolutely no idea they were at the peak of their cycle. They were unable to predict that things would go down, that their order books would dry up just a year later, or even a quarter later. Sometimes, it's even the next quarter, they were surprised that suddenly no one was ordering their memory anymore, etc. So this story is more or less the same. However, what's a bit tricky is that when you look at P/E ratios or price-to-free cash flow, well, it's not that aberrant either for a company growing at, with a projected growth of 58% per year and growing at 50% per year. I'm sorry, but a price-to-earnings ratio of 46 is not aberrant to the extreme. Okay? Especially when you look at it forward, it's around 25 or 30. So it's really not aberrant in terms of valuation at all. It's just that if you look at the history, every time it was valued this high, it ended badly afterward. It ended badly afterward. There was a normalization. So I prefer to stay away from all of that. If you're in the mood to get screwed, to get screwed over because of this kind of thing, do it. It's your money after all, it's not mine. But with my money or my clients' money, I don't mess with that. I prefer simply to miss the train. I prefer that Micro Scanic goes up another 400% and I watch them go up another 400%. I don't care, given that I have my strategy, and for that matter, I have no semiconductor stocks in my portfolio, and since the beginning of the year, my portfolio has significantly outperformed the indices. My portfolio has achieved a +17% so far this year, compared to about +9% for the various indices. So that doesn't bother me. We can outperform without exposing ourselves to these things and without going for them. So that suits me perfectly. We move on to Google. Google, I like what they're doing less and less. They are taking on debt to continue investing. They are diluting shareholders to continue investing. Now, debt remains quite well managed, mind you, let's not get carried away. But yes, there is an acceleration compared to 5 years ago in growth, whether it's net profit or revenue. Now, for earnings per share, adjustments need to be made. There are investments in SpaceX, which have boosted net income. So, be careful about that. But if we look at free cash flow, it's flat. Free cash flow has not been growing for a while due to one thing: due to all the massive investments they are making in AI. If you look at free cash flow, it's at the level of 2021-2022. It's been 5 years that we've had generally no growth in free cash flow, that it's generally very stable. Now, it's more or less normal. We often have periods, we saw from 2011 to 2016 approximately something very stable in free cash flow. Similarly, from 2016 to 2019, stable. In fact, it increases in stages, they invest a lot to develop something, and then they monetize it incredibly. If we value this now based on cash from operating activities, okay, to avoid taking into account the dilution from capex. Okay, we will assume that the capex will be well spent. Okay, this is really based on the thesis that capex will be well spent. Maybe it will be poorly spent, but let's assume it will be well spent. So we will value it on cash from operating activities. If we look here at the price-to-cash operating at 25. The median is 17-18. Over 30 years, the median is 19. So we will put it at 17-18 here as well. But if we imagine, we are at 164 billion. What did I have for operating cash flow? 174 billion, not 164. Oops, let's modify that. So if we take 174 billion, a growth of 15% per year, and a price-to-operating cash flow of 18, that gives us a fair value of $283. We are at 372, which would mean a decrease of 23% to make 13% per year. Here, if we want to make 13% per year, we would need to be at 20 here and a growth of 19 here. It's doable, okay, but it still leaves too little margin of safety, which is why I put Google at the same level as Hermes today. I will put it in B, it's too expensive for me. We move on to Mastercard. Mastercard, which has been struggling since the beginning of the year, struggling to perform because profits are very good. But over 1 year, we are at -20% over 1 year, almost since the beginning of the year -6%. So it's struggling to advance. Yet, we have a company, it's almost a perfect score here. Double-digit growth that is re-accelerating compared to 5 years ago, which is very good. Earnings per share, re-acceleration too. Free cash flow, re-acceleration. So magnificent. Debt, there is almost none. Margins are very high and still growing. Profitability is very high and still growing. Very little capex, which is pleasing. A light business model as we like, it's magnificent. Very little stock-based compensation, so that's perfect. We have a company that also buys back its shares. You can see here that over the last 10 years, they have bought back on average 2% of shares per year, 16% in total over the last 10 years. So we appreciate that a lot. And today, it's valued at what? If we look at the price-to-free cash flow, it's trading at 24 times free cash flow. It's not often that we've had 24 times free cash flow for Mastercard. The last time we were at 24 times was from 2009 to 2011-2012. There, it was after the subprime crisis. That's the last time we had such a low price-to-cash flow. Yet, we have a company that continues to grow. We have a company [throat clearing] that, well, that manages well, that still has its growth as we would like to see it. Management is still confident about how the company is managed, and we have the growth we want. When we look at free cash flow, we will look at that. Uh, well, here is free cash flow. Well, we have very strong free cash flow growth. If we look at it quarterly, we generally have very good growth. Now, Q1, [throat clearing] it's normal for it to be lower, but Q1 of this year compared to Q1 last year, we have nice growth that has nice growth compared to Q1 of the year before. We are growing very cleanly as we would like to see. So that's good. Nothing to report on that. Management is still as competent and as honest as ever. So, there's really no reason to worry too much about Mastercard. Now, if we value this today, if we take the current net profit, where will we find it? Oops, it's 15. Now, it's the free cash flow that I took, as I just checked it. I think I took the free cash flow. Yes, I took the free cash flow here. So, if we take the company's free cash flow, we are at 17 billion. Where are we? 17.7 billion approximately. Okay, so let's put it at 17.7 billion. If we estimate a growth of 13% per year in earnings per share and a price-to-free cash flow of 27 in the future, we get 16% per year. Historically, this company is re-accelerating. So 13% seems perfectly fine. We have an estimate of around 15% growth per year. We're doing well, you see. I'll show that at 13%, we have good margins of safety, a price-to-free cash flow of 27. We can even have a price-to-free cash flow of 25 to take even more margins of safety, which would give us 14% per year, resulting in a fair value around $511, between $511 and $520. I think Mastercard is a very good deal. It will be the first in the tier list today. I think it's an excellent deal, especially to get out of all this tech and AI, and to be in a light business model that doesn't require capex. I think it's a good thing to diversify your portfolio towards this type of model, especially when it's easy to invest in companies that only have capex right now. So, Mastercard, I really, really appreciate what I see. We move on to Meta. Meta, which is a bit up and down. One moment they're doing well, the next moment it's a bit less good. It's going in all directions. So far this year, it's been quite volatile. We can see that there have been big drops, then a rebound, then it drops a bit again. We are flat overall since the beginning of the year. Over one year, we are down about 9% because there is still this thing, enormous
expenses in AI. On the other hand, we have a re-acceleration of revenue. So, we tell ourselves "Ah, finally the expenses are not so bad given that the cash registers are going up." So, when I say the cash registers are going up, it's the revenue that's re-accelerating. If we look at the growth here, 22% revenue growth, it's re-accelerating compared to 5 years ago. However, earnings per share are declining. Free cash flow is declining. That's what I think scares investors because we potentially have margins that are slightly declining, and yet they are globally quite well managed, because compared to 5 years ago, we are up, it's just compared to 2-3 years ago where we are slightly down. If we look at earnings per share, we can see that we still have a little bit of growth. It's a bit more sluggish, so it's a bit scary. If we have to value MTA today. If we do it based on operating cash flow, we have 124 billion in operating cash flow for a price to operating cash flow around 12. Historically, this is a company that will pay 20 times its operating cash flows. Okay? So 124 billion, if we have a 15% growth to reach 13 in operating cash, that gives us a fair value of 627 dollars, a fair value of 700 dollars, 693 to achieve 13% per year. We are only at 627, so we are undervalued, which is not bad at all, and we have a potential CAGR of 15% per year with these estimates. Now, if we are a bit more daring and say we're going to aim for 20 here, well, we have a fair value of 1000 dollars. So MTA, I find it's not expensive. I think I would put it in S here, below 620 dollars. I would put it in S. It seems like a very good opportunity. We move on to Fortinet. Fortinet, which has given us a good return since the beginning of the year. We can't complain. You can see the explosion we've had since the beginning of the year. We are at +80% over one year, +44%. There was this huge drop here. Then it stagnated from August 2025 to April 2026. So about 8 months. Many were not patient with these 8 months because many believe a company is good if the stock price goes up and a company is bad if the stock price goes down. But that's not going further in the analysis, whereas one must analyze what is happening internally in the company. One must analyze what management announces, one must analyze how the figures are evolving. And what happened is that we have a new re-acceleration of growth. Not as much as 10 years ago, obviously, but it's picking up slowly. Free cash flow is picking up well. We have very good debt. Margins are very good and growing, and profitability is also growing. In addition, we have share buybacks that have been done very smartly, which results in a reduction of shares by 2% per year and over the last 5 years, 2.4% per year. So that's a good thing. Today in terms of valuation, it's trading at about 56 times earnings, 45 times free cash flow. So, it's starting to get expensive. Even if we have an acceleration of the... what do we call it? Even if we have an acceleration of growth, it's starting to get a bit expensive. We are at increasingly higher levels. The last high was in 2021. So, yes, we are at levels that are starting to be a bit worrying. So if we are to value this, we have a free cash flow of 2400 billion, or 2.4 billion. If we aim for a price to free cash flow of 25 for a free cash flow growth of 12% per year, we have a fair value of 80 dollars. Now, if we estimate that we will have an acceleration, that we will grow at 15% per year, and we give it the premium for being a company that is always paid a bit more, that the leaders are always present, that they are very smart, that it is very well managed, that would give us a fair value of 100 dollars. And so this is by being particularly optimistic about the stock. So, unfortunately, this is a very, very high-quality company. That's not the question. I love this company. I think it's perfectly well managed, but it's too expensive today. It's too expensive. So we won't throw it away for this valuation, but it's going to... because someone who has Fortinet in their portfolio, I don't think it's expensive enough to justify selling it today, but it remains too expensive to initiate a position. It's clearly not the time. Similarly, you really need to get out of this idea that the stock price is going up, so you absolutely must buy, the stock is good, and the stock price is going down, you absolutely must sell, the stock is bad. You really need to get out of that and look at whether the fundamentals are going up, whether the fundamentals are going down, what price we are paying for the fundamentals. That's the basis of the basics of the basics if you want to have long-term success in the stock market. And here with Fortinet, we certainly have fundamental growth, but it's also driven by enormous growth in the stock price, which increases the valuation, making it too expensive. We move on to Mercado Libre, which since the beginning of the year, similarly, since the beginning of the year, we are at -7%, so it's struggling a bit over one year. -36%. Yet, we have exceptional growth. Over 30% growth, 42% revenue growth. Net profit per share 120%. Now, what needs to be understood is that margins are slightly declining. Management had announced it, it's not something new. Management had announced that operating margins would decline simply because they are investing a lot and they operate in phases. That is, they have a period where they focus on growth, gaining market share, increasing competitive advantage, and so margins will often decrease. And then there's the period where... it's not that they reduce growth, but they focus less on growth, they focus on profitability. So, operating margins are increasing, while revenue growth and everything else, it's not that it will decrease, but we will have less growth. And that's what's happening. We are in a phase where margins are declining but growth is re-accelerating. So, very well played by management. That's how it's managed. Today, it's trading at about seven times free cash flow. Now, don't be fooled. It's not trading at seven times free cash flow. Is there an adjustment to be made? We'll see how to make this adjustment because, as you know, since 2021 or 22, I'm not sure exactly, there's the banking part now, and unfortunately, they include this banking part in their free cash flow, even though it's customer money, it's not their money. So, this adjustment needs to be made. To do this, it's very simple. We'll go to the 10Q. We'll take the latest quarterly report, and in there, we'll need to find the line item to retrieve, which is funds payable to customers. We'll need to calculate the difference between what it is now and what it was a year ago. So, now, in funds payable to customers, we are at about 14 billion. A year ago, more or less, we were at... we were not at 13 here, we were more or less at 7 billion. I'll try to find it exactly. Funds payable to customers. We were... we won't have it here in the quarterly, we might have it in the annual. In the annual, we'll put it. There, you see in the annual, we see 2025 compared to 2024, we were at 13 billion, and in 2024, we are at 7 billion. So, we have about a 6 billion difference. So, these 6 billion will need to be subtracted from the free cash flow, for example, or from the operating cash flow. So, we'll subtract them from the free cash flow. So, we have a free cash flow of 10 billion. We need to subtract these 6 billion. So, that means we have a free cash flow of 4 billion, not 10 billion. So, our free cash flow is almost divided by three. Okay. Not exactly by three, but approximately. So, that means our price to free cash flow is not 7, but it will be more or less around 20. Similarly, our price to operating cash flow will not be 6, but it will be a bit higher. So, be careful about that. Generally, if we take the operating income, you see it gives approximately the operating income. It's more or less, it's not exactly the operating income, but it will give us more or less the operating income. And so, we have an operating income of 3 billion for a market cap of 82 billion. That makes a price to operating income more or less between 25 and 30. Okay? I did the quick calculations in my head. Someone will be happy to correct me in the comments, but you get the idea. So, be careful not to be fooled. It's not trading at seven times free cash flow, it's actually trading closer to 20 to 30 times free cash flow. And so, this is a potential trap to avoid. Nevertheless, that doesn't mean the stock is too expensive. It just means you need to be careful about that. So, if we take a price to free cash flow around 25, and we estimate a free cash flow per share growth over the next 5 years of 14% per year, we could achieve about 18% per year. So, it remains a company that is not very expensive, which can be very interesting. Likewise, on the channel, you will find a complete video explaining why I decided not to invest in Mercado Libre. Despite the fact that it's still a very, very interesting case, especially for getting out of the US or Europe a bit, I decided not to invest in it, but that doesn't mean it's not a very good company. So, I'm going to put it here in S regarding its valuation, but there are still reasons why I preferred not to invest in it. But that's more personal and related to my vision. But someone who tells me they come from Mercado Libre, who finds it an exceptional company, I couldn't really contradict them because it remains a very good company. We now move on to Ferrari. Ferrari, which similarly, has been struggling a bit since the beginning of the year. It has decreased a bit, it had risen well following certain earnings, only to globally fall back afterwards. So, since the beginning of the year, we are at +3%. Over one year, however, we will be at -27% to -30% almost for a company where we have a nice deceleration of growth. Okay. Compared to 5 years ago, even compared to 10 years ago. Earnings per share is the same. Especially since Ferrari has announced reducing production to increase the scarcity of their models, their cars. We have well-managed debt, excellent and increasing margins, excellent and also increasing profitability. So, that's very good. However, unfortunately, it's still a company that we pay a lot for the little growth there is. Okay, it's trading at 33 times free cash flow, while behind that, we have good free cash flow growth, but not exceptional. So, we have very, very good recent free cash flow growth, but that's because there have been some exceptional events. If we base ourselves on net income, because we need to be careful, here on Ferrari's free cash flow, if we base ourselves on net income, we still have growth that is around 14% per year over 10 years. Over 5 years, 19% per year, and recently, it's more like 45%. So, 45% free cash flow growth to pay for that 33 times, I find it a bit low. 33 times would require at least 15% per year growth. That's what we had in the past. And now, we have a bit more doubt if it will continue like that. So, I find that the premium is not worth paying. If we have growth here, so we'll put it at 30. To achieve 13% per year, we would need 18% per year growth in earnings per share. Do you think earnings per share will grow by 18% per year over the next 5 years? Personally, I have doubts about that. I'm more in the range of... I think by putting 10, we are quite generous. Which means that gives us a fair value of 250 euros, and we are at 350. I find that at 350, there isn't enough margin of safety. It's much, much too expensive. It's even more expensive, I think, than Arm. So, I'm going to put it in C here. However, that doesn't prevent the company from having a great competitive advantage, that the company is very good, it's well managed too, but it's too expensive. It leaves too little margin of safety for someone who wants to outperform the indices. For someone who doesn't care about outperforming, who is okay with making their 5% per year. Yes, okay. There, I think there's not too much of a problem with that. We don't take too much risk by buying Ferrari and waiting 20 years and saying we'll have more money in 20 years than today. I think we don't take too much risk there. However, to do better than the indices, well, you'll have to have more margin of safety. You'll have to increase your margin of safety, have better deals, buy at better prices. And here, unfortunately, it's not a good deal to buy Ferrari today to outperform in the long term. However, it's possible that you buy now and in 3 years, it has made +100% and you have outperformed. It's possible. I don't have a crystal ball. The idea here each time is to increase your probabilities, your chances of doing better. That doesn't mean we will invest in companies that will do worse. It means we won't invest in companies that will do better. It means we will also invest in companies that will do better. Unfortunately, we have no direct control over that. The only thing we have control over is increasing our probabilities to have the best possible chance on our side to outperform. And unfortunately, today with Ferrari at these prices, I find that we don't have a positive expectation. We are not really... we are not maximizing our chances. We move on to the last company in this tier list, which is Microsoft. Microsoft, which is struggling a bit since the beginning of the year compared to the others, with +5% when we see that Meta is also struggling a bit, but when we see how Amazon has exploded recently, how Google has also exploded, well, Microsoft is a bit behind. Yet, we have a very good rating here. We have very good growth that is re-accelerating. So, we like to see that. We have debt that is still well managed, margins that are growing again, which is good. We have very good returns on capital too for a business that invests a lot, the capex has increased significantly compared to operating cash flow, but we still have operating cash flow growth. So, that's a good thing. If we are to value this company, operating cash flow is currently at 18. It's trading at 18 times operating cash flow. Historically, it trades at 23 times. Over 20 years, it trades at 14 times. Over 30 years, it trades at 18 times. We have this phase here, there's a Microsoft before and after 2017. For me, we need to take the Microsoft after 2017, where we have a median of 23 times. So, I won't take 23, obviously, I'll take margins of safety, but the business model has changed significantly with the arrival of the cloud, etc., with the arrival of Satya too, it's no longer the same business model as before, so it's normal that it trades at a higher price. We have 170 billion in operating cash flow. So, if we are to value that, we put ourselves at 170 billion here, we will aim for 18 times operating cash flow. Okay? So, we won't put ourselves at 20, we'll put ourselves almost at the same level as Google or Amazon or even MTA. Even Meta, we were still below. Now, if we have operating cash flow growth of 15% per year, well, we would achieve 14% per year with Microsoft. That gives us a fair value of 461 dollars. We are currently at 428 dollars. So, it remains a perfectly reasonable price for the company. Now, if they manage to accelerate this growth and reach 20%, we would achieve 19% per year. And if we have an improvement here and return to the historical median of 23, well, we would have a fair value of 586 dollars, which would mean we would achieve 20% per year by buying Microsoft at these prices. With good margins of safety, I put it in A, meaning I consider it a very good opportunity. But I find that Meta is a slightly better opportunity than Microsoft at the moment. But Microsoft remains a very good opportunity. It could have almost been in S here. So, that's it for this ranking. If you want to go further and be accompanied to invest, to build a portfolio that has the best chance of outperforming the indices, click on the link in the description. We'll talk on the phone, we'll see what can be put in place for your portfolio differently from what you're already doing, obviously, and especially more effectively to achieve this outperformance. You can click on the link in the description, we'll book a call together, we'll discuss it on the phone. We'll see if the strategy is suitable for your portfolio, if there are any additional points we can achieve, and an improvement we can achieve for this portfolio. The call is non-binding. At worst, you'll leave with an action plan, at best, you'll join the coaching so that I can especially help you achieve better performance. Tell me in the comments what you thought of this tier list. What would you have put differently in the tier list? Also tell me the stocks you would like to see for future tier lists. And of course, remember to give a thumbs up and subscribe by activating the little bell so you don't miss any future episodes. We'll see you very soon for another video.