Unable Investment
Club
October, 2025 Meeting Minutes
November 3, 2025
The monthly meeting of
Unable Investment Club was held at El Dorado Saloon and Grill in El Dorado
Hills on Thursday, October 2, 2025. The
meeting commenced at 2:57 pm with KS presiding for FN. JL, PR and HT were also in
attendance.
Unable Investment Club has 1 opening.
The Valuation and Member
Status reports were reviewed and the checks were collected.
Late: None.
Old Business:
None.
New Business:
KS
expressed the concern that several stocks that UIC bought are essentially
forgotten after the initial purchase. If stocks are good picks, then the club
should have no reservations about adding to them at subsequent meetings. Stocks
that are a small percentage and/or poor performers should be evaluated as either
worthy to add to the position or a sell.
Stock News:
AMT Wireless providers depend on a network of telecom
towers to deliver 5G service to their customers. Many of those towers are
leased through American Tower. The company owns around 150,000 towers around
the world, with roughly 42,000 towers in the U.S. and Canada. American Tower
also owns hundreds of distributed antenna systems for indoor and outdoor
venues, as well as 30 data centers. American Tower stock has been largely
stagnant over the past few years, but the company's results just keep getting
better. Revenue jumped by 7.7% year over year in Q3, adjusted earnings before
interest, taxes, depreciation, and amortization (EBITDA) rose by 7.6%, and
adjusted funds from operations (AFFO), a standard metric reported by real
estate investment trusts (REITs), surged by 10.4%. Rising global data demand is
driving revenue higher in the core business, and demand for hybrid cloud and
artificial intelligence (AI) workloads is boosting the data center business. For
long-term investors with $1,000 to invest, American Tower is a great buy, and a
healthy dividend sweetens the pot. The current quarterly dividend of $1.70 per
share works out to a dividend yield of about 3.7%. That's a historically high
yield for American Tower, and it will reward investors as they sit tight and
wait for the stock to break out of its funk.
AAPL On the heels of a recent rally, Apple stock's market
capitalization climbed above the $4 trillion level for the first time in the
company's history this week. As of this writing, Apple's market cap is now
ahead of Microsoft's, which just dipped back to just below $4 trillion.
Meanwhile, Nvidia is sitting at the top of the heap with a market cap of
approximately $4.95 trillion, having fallen back a bit after topping $5
trillion earlier in the week. In addition to news of strong sales for the
company's iPhone 17 lines, there's another huge catalyst that has helped
Apple's valuation surge to a new all-time high, with the company joining the
illustrious ranks of the $4 trillion club. Over the last week, President Donald
Trump and administration officials have made comments suggesting that it's
likely that the U.S. will be able to reach a trade agreement with China in the
near future. If so, that would be great news for Apple. Tense relations between
the U.S. and China have contributed to relatively sluggish sales performance
for Apple's hardware in the Chinese market as shoppers in the territory have
increasingly opted for domestic brands. While Apple is making big investment
commitments to expand its manufacturing capabilities in the U.S., the tech
giant still relies on Chinese factories for a large percentage of its hardware
manufacturing. As a result, the company stands to face some significant
headwinds if high tariffs remain in place. With signs that tensions between the
U.S. and China could de-escalate in the near term, some of the biggest
potential headwinds facing Apple could be alleviated. On the other hand,
investors should keep in mind that there is still the potential for unfavorable
twists and turns when it comes to U.S.-China relations -- and Apple could face
valuation volatility if signs emerge that the dynamic is souring again.
AMAT Over the past few years, the explosive growth of
artificial intelligence (AI) has generated strong tailwinds for AI-focused
chipmakers like Nvidia. Therefore, the most straightforward way to profit from
that trend might be to simply invest in those top chipmakers. Yet semiconductor
equipment makers like Applied Materials are also benefiting from the AI boom.
It isn't a hypergrowth play like Nvidia, but Applied Materials' stock has risen
nearly 270% over the past five years as the S&P 500 has nearly doubled.
Let's see why it outperformed the market -- and if it's still worth buying. Applied
Materials is one of the world's top suppliers of semiconductor manufacturing
equipment. In fiscal 2024 (which ended last October), it generated 73% of its
revenue from its semiconductor systems business, which produces a wide range of
equipment for the foundry, logic, and memory chipmaking markets. Another 23%
came from its related services, while the remaining 4% came from its display
and adjacent markets. Here's how its core businesses fared over the past five
years. In fiscal 2022 and fiscal 2023, growth decelerated as the semiconductor
market lapped its pandemic-driven boom in 2020 and 2021. Many chipmakers
expanded their capacity during the crisis to meet the soaring demand for new
PCs and servers. But as that temporary growth spurt ended, rising chip
inventories drove many producers to reduce their capital expenditures and
purchase less equipment. A supply glut in the memory chip market, tighter
export curbs on chip sales to China, and supply chain bottlenecks exacerbated
that pressure. To make matters worse, inflation drove up its operating costs
while rising interest rates drove many chipmakers to rein in their expansion
plans. But in fiscal 2024 and fiscal 2025, Applied Materials' top- and
bottom-line growth accelerated again, driven by four main catalysts: the growth
of the AI market, the memory market's recovery, the stabilization of its supply
chain, and lower interest rates. The expansion of the semiconductor market
helped Applied Materials outperform the S&P 500 over the past five years.
Today, it hovers near its 52-week high because investors are likely impressed
by its near-term tailwinds -- especially its exposure to the booming AI market.
During the company's latest conference call, CEO Gary Dickerson said its
long-term thesis "remains unchanged as companies and countries compete to
win the race for AI leadership" -- and that the business is "best
positioned at the major device inflections that enable the AI road map." However,
it doesn't disclose exactly how much revenue it generates from AI-focused
chipmakers. It's also growing much slower than its industry peer ASML, which
dominates the high-growth niche of lithography systems. For fiscal 2025,
analysts expect Applied Materials' revenue and adjusted earnings per share
(EPS) to grow 4% and 8%, respectively. For fiscal 2026, they expect revenue and
adjusted EPS to rise 3% and 1%, respectively. Those rates are stable, but
they're not that impressive for a stock that trades at 23 times forward
earnings. Its paltry forward dividend yield of 0.8% also won't attract any
serious income investors. So, while Applied Materials can be strong long-term
play on the semiconductor market, I wouldn't call it an AI stock yet. It would
benefit from the expansion of the AI market, but it's also exposed to plenty of
other markets. Tighter curbs against exports to China, which accounted for 30%
of its revenue in the first nine months of fiscal 2025, could generate even
more unpredictable headwinds. Therefore, Applied Materials' stock might still
be worth buying (especially at a slightly lower valuation), but there are
plenty of better ways to invest in the AI chipmaking boom. I personally think
ASML -- which has monopolized the market for high-end lithography systems -- is
a better play on that secular trend.
BWXT Little-known nuclear power components manufacturer BWX
Technologies is having a moment. Earlier this week we learned Canada will use
the company's BWRX-300 small nuclear reactor for its Darlington New Nuclear
Project. Today we learned BWX is expanding relationships in the United Kingdom
as well. As BWX just announced, it has signed a memorandum of understanding
with Britain's Rolls-Royce to support collaboration on the Rolls-Royce SMR --
said to be a pressurized water reactor capable of producing 470 MWe. BWX will
be designing nuclear steam generators for the company's reactors. Contracts for
the supply of "multiple reactor units" are envisioned over time, as
Rolls-Royce performs on contracts to construct 3 gigawatts of new nuclear power
in the Czech Republic, for example. No value was stated for the BWX contract
with Rolls-Royce, however, nor any price stated for the components BWX will be
supplying -- making it hard to say how big of a revenue boost this will provide
BWX, or whether the contract would be profitable. What we do know is that BWX
is a $17 billion company earning about $295 million annually, and generating
about $360 million in annual free cash flow (FCF). That puts the stock's
valuation at roughly 57 times trailing earnings, and an only slightly less
nosebleed 47 times FCF. For a stock pegged for only 13% annualized earnings
growth over the next five years, according to Wall Street analysts, these are
expensive valuations. As optimistic as I am about the potential for nuclear
power, I won't pay just any price to invest in it. BWX stock costs too much,
and I'm afraid it's a sell for me.
CNI The Canadian National Railway is a powerful company,
driving the economy by transporting more than 300 million tons of natural
resources, manufactured products, and finished goods throughout North America
annually. It has nearly 20,000 miles of rail lines and related transportation
services, connecting Canada's East and West Coasts, and the Midwest, including
a valuable route through Chicago and all the way to New Orleans. What makes CN
(as it's known for short) a great dividend stock is an economic moat that's
based not only on its geographic reach but also on its extensive railroad
infrastructure that's nearly impossible to replicate. And it's the primary and
most significant rail operator for the Port of Prince Rupert in British
Columbia, which contributes to its intermodal growth potential. Those
competitive advantages and its moat help the company continue to print cash,
and in turn increase its dividend. CN has closed the margin gap with
competitors in recent years, after having led the industry in the early 2000s
thanks to pioneering the practice of precision scheduled railroading (PSR).
However, the father of PSR, Hunter Harrison, took his talents to competitors in
2009, and while his innovations still have their imprint on the business, the
company needs to refocus on margins. While that process develops, investors
have a respectable dividend yield of 2.7% and a history of consistent
increases.
COST Costco isn't just a retailer -- it's a phenomenon. From
$1.50 hot dogs to cavernous warehouses and famously cheap rotisserie chickens,
Costco has built an almost cult-like following in North America. The company's
unique business model has allowed it to thrive in an industry known for
razor-thin margins and price-sensitive shoppers. Costco's real secret weapon
isn't on the shelves. The firepower lies in its membership model. Customers pay
$65 annually for a basic membership or $130 for an executive membership, which
comes with extra rewards. As of the last quarter, the company had more than 81
million paid memberships -- driving $5.3 billion of revenue in the fiscal year
(ending on August 31, 2025). Membership revenue isn't just a nice bonus. It
covers about one-fifth of overhead expenses, allowing the company to sell
products at lower gross margins on a unit-basis. That's why shoppers can
consistently find prices that competitors can't match, and why Costco doesn't
rely on high markups to generate profits. Memberships are not only plentiful
and growing, but they are sticky too. Costco's renewal rates are extraordinary.
Around 90% of members renew every year globally, and the rate is even higher in
the U.S. This creates a virtuous cycle: Low prices bring in shoppers. Shoppers
are happy and renew their memberships. Renewals give Costco scale. Scale allows
for even lower prices. Rinse and repeat. Once customers are in the Costco
ecosystem, they tend to stay. It's difficult for competitors to replicate this
flywheel because it's built on decades of trust, scale, and consistent
execution, not flashy marketing. Even though Costco already operates 890
warehouses worldwide, it's not slowing down. Management expects to increase
that number to 914 by the end of fiscal 2025 and to 944 by fiscal 2026 (six
percent growth). This disciplined expansion strategy focuses on high-return
locations rather than aggressive, margin-eroding growth. Costco's financial
results reflect its steady, reliable model. Last year, the company generated
$275 billion in revenue (+8% y/y) and $8.1 billion in net income (+10% y/y),
while producing $7.8 billion in operating free cash flow. Return on invested
capital is a robust +20%, and has been steadily increasing; showing that the
company doesn't just grow--it grows efficiently. Again, the $5.3 billion
membership fees last year are almost pure profit and are what make Costco's
thin-margin retail operations sustainable, turning what would be a low-margin
store model into a cash machine. The stock trades at about 46× forward earnings,
which is expensive compared to most retailers, like Walmart at 34x, BJ's
Wholesale Club at 19x and Target at just 11x. But Costco has earned that
premium. Earnings have grown at an average of +10% for years, and the company's
high renewal rates and expansion plans make that growth stronger more
predictable than most in the sector. For example, Target has seen its revenues
flat-line and earnings trend down in the last three years. Over the past
decade, Costco's stock has appreciated more than 500%, rewarding long-term
investors handsomely. If the company keeps executing, there's no issue with it
continuing to grow earnings into its valuation. At a 10% earnings growth rate,
the P/E goes from 46x to 29x within five years. A pullback in consumer spending
is always a risk in retail, but Costco tends to shine when times get tough.
Shoppers often trade down to its bulk bargains, keeping sales steady even when
others struggle. That said, inflation and currency swings can pressure margins,
especially if Costco holds prices low to protect its value reputation. Costco's
model is rooted in its consistency. Membership fees make up most of its profit,
giving it a steady income stream that cushions against volatility. It's a
simple formula -- low prices, loyal members, and reliable recurring revenue --
but it's proven to work in good times and bad. However, in my mind the sharpest
risk stems from the company's reliance on membership revenues. While renewal
rates hover above 90%, a prolonged slowdown could deal a double whammy of less
membership fee revenue and fewer physical sales. This doesn't seem to be
showing any sign of slowing anytime soon though. Costco has built a retail
fortress powered by membership loyalty and unmatched value. Its model flips the
traditional retail profit equation: instead of squeezing margins on goods, it
wins with recurring membership revenue. For long-term investors, Costco offers
a rare mix of growth, resilience, and customer devotion that few competitors
can match. In a world where most retailers fight for thin margins and fleeting
traffic, Costco's unique and cult-like membership model, relentless focus on
value and enormous scale have poured the foundation for a sustainable
competitive advantage for years to come.
EME Emcor is a large-cap, diversified provider of
construction services, and it has caught fire this year on the back of demand
for artificial intelligence (AI) data centers, which has bolstered its
electrical services segment. Despite beating analyst expectations on both the
top and bottom lines this morning, Emcor fell, as its forward guidance wasn't
enough to satisfy investors after a 70% run in the stock in 2025. In the third
quarter, Emcor grew revenue 16.4% to $4.3 billion, while earnings per share
(EPS) grew slightly slower at 13.3% to $6.57. Both figures beat analysts'
expectations, despite the slight margin compression. The star of the show was
Emcor's Electrical Construction & Facilities Services segment, which
rocketed 52.1% in the quarter. All of Emcor's other segments grew in the
low-to-mid-single digits. So, what was the problem? Likely, full-year guidance.
For the year, management now expects between $16.7 billion and $16.8 billion in
revenue, whereas last quarter's guidance was for between $16.4 billion and
$16.9 billion, a wider range with a higher top limit. And while the company
raised the bottom end of its EPS estimate range, it didn't increase the top
end, keeping it at $25.75 despite the quarter's beat. Another positive was
remaining performance obligations, which are long-term contracts that have yet to
be fulfilled. That figure grew 29% to an all-time high of $12.61 billion. Still,
it appears the near-term guidance was enough to cause a round of profit-taking
in the high-flying stock. After today's plunge, shares trade at 25.6 times 2025
earnings estimates. That's not exactly cheap, but it's also not overly
expensive for a company that stands to benefit from the demand for data
centers. Emcor's AI-exposed electrical segment made up about 31% of Emcor's
U.S. operations -- the company is divesting its UK operations -- and as that
segment makes up a greater portion of the business, overall growth should hold
steady or perhaps even accelerate. This is a stock worth investigating to
potentially buy on the dip.
GOOGL Quantum computing stocks have taken investors on a wild
roller coaster ride over the past two months. However, this has mostly been
centered around the pure-play quantum computing companies, like Rigetti
Computing. It hasn't included the company that I predict will be the ultimate
quantum computing winner over the long haul: Alphabet. Alphabet recently
announced what its in-house quantum computing solution can do, and it's wildly
impressive. This announcement vaulted Alphabet into a leadership role, and it could
easily maintain that position over the course of the quantum computing
megatrend. I think it will be the ultimate quantum computing winner, and I also
think it's the only quantum computing stock worth owning right now. All of the
quantum computing pure-play investments carry the same risk: They could fail,
and their stocks would fall to $0. This is a real risk that isn't discussed
often enough, and could lose investors a ton of money if it occurs. This is
also why these stocks are so volatile, as some investors saw their initial
positions rapidly increase in price and wanted to take the gains rather than
sit around and find out if these companies will produce a viable technology or
not. Alphabet doesn't have this risk. It has several viable businesses that
generate a ton of cash, like Google Search and YouTube. Alphabet can use these
funds for multiple purposes, and it's building out AI data centers right now.
However, it's also using some of those funds to fuel its quantum computing
research. If this pans out and Alphabet can use quantum technologies that it
has developed in-house instead of needing to purchase equipment from an
external vendor, it can boost its cloud computing margins. This would be a huge
win for Alphabet, and it's already starting to see some of its investments pay
off. Last year, Alphabet announced that its Willow quantum computing chip had
completed a task that would have taken a traditional supercomputer 10
septillion (10 to the 25th power) years to complete. While this was impressive,
it was a test that was suited for quantum computing and has no commercial
relevance. Recently, Alphabet announced another task that was completed 13,000
times faster than the world's most powerful supercomputer. This algorithm is
the first verifiable algorithm to be run on a quantum computer, so this is a
clear step toward proving commercial viability. Alphabet is likely further
ahead than the competition, as it doesn't need to announce every breakthrough
like the pure plays do. It has all the funding it needs to complete its work.
The pure plays must announce every success to keep potential investors
interested. Alphabet can keep its cards close to its chest while the others
have to play with them face up. This is a monster advantage that cannot be understated,
and it's a primary reason I think Alphabet is the best quantum computing
investment right now. In addition to its quantum computing pursuits, Alphabet
has a growing cloud computing business, a thriving advertising business through
its Google Search engine, and artificial intelligence endeavors. Alphabet is
involved in seemingly all cutting-edge technologies, although it doesn't always
get the respect it deserves. At 26 times forward earnings, it may not be
historically cheap, but it's still at a lower price tag than many of its peers.
Alphabet is just now getting recognized for its potential, and with strong
quarterly results, it could still be an excellent investment. I think Alphabet remains one of the best
stocks to buy today in earnings, and if you're looking for a company with
massive potential in the quantum computing realm, I think it's the best and
safest investment by far.
LIN Linde delivered robust third-quarter 2025 results,
with earnings per share (EPS) climbing 7% to $4.21. The company generated $1.7
billion in free cash flow, supported by an 8% rise in operating cash flow. CEO
Sanjiv Lamba highlighted the $10 billion backlog, which secures long-term EPS
growth. The electronics sector, driven by high-end chip production, was the
fastest-growing market segment, contributing 9% to sales. CFO Matthew White
reported a 3% sales increase to $8.6 billion. Linde projects Q4 EPS between
$4.10 and $4.20, reflecting a 3% to 6% growth. Linde, the largest industrial
gas supplier globally, operates in over 100 countries. The firm's primary
products include atmospheric gases such as oxygen, nitrogen, and argon, as well
as process gases like hydrogen, carbon dioxide, and helium. Linde serves
diverse end markets, including chemicals, manufacturing, healthcare, and
steelmaking. In 2024, the company generated approximately $33 billion in
revenue, positioning itself as a leader in the Basic Materials sector and the
Chemicals industry. With a market capitalization of $196.73 billion, Linde's
strategic focus on high-growth segments like electronics underscores its robust
market positioning. Linde's financial performance is underpinned by strong
revenue growth and expanding margins. The company reported a 3-year revenue
growth rate of 5.1%, with a gross margin of 48.45% and an operating margin of
26.88%. Profitability metrics are robust, with a net margin of 20.2% and an
EBITDA margin of 39.27%. On the balance sheet front, Linde maintains a
debt-to-equity ratio of 0.67, indicating a balanced approach to leveraging. The
company's current ratio of 0.93 and quick ratio of 0.78 suggest adequate
liquidity to meet short-term obligations. However, the Altman Z-Score of 3.59
reflects strong financial health, while insider activity shows some caution
with recent selling transactions. Linde's valuation metrics indicate a fair
market assessment. The company's P/E ratio stands at 29.84, close to its 5-year
low, suggesting potential undervaluation. The P/S ratio of 6.04 and P/B ratio
of 5.11 align with historical norms, indicating stable investor sentiment. Analyst
targets set a target price of $513.36, reflecting confidence in Linde's growth
trajectory. Technical indicators such as the RSI of 23.47 suggest the stock is
currently oversold, while moving averages indicate potential resistance levels.
Linde's financial health is bolstered by a strong Altman Z-Score and a Beneish
M-Score of -2.63, indicating low risk of financial manipulation. However,
sector-specific risks such as fluctuations in industrial demand and regulatory
changes in the chemicals industry could impact performance. The company's beta
of 0.73 suggests lower volatility compared to the market, providing a degree of
stability for investors. While insider selling activity warrants attention, the
overall institutional ownership of 82.08% reflects strong confidence from large
investors.
MSFT Microsoft delivered another strong quarterly report
last week, though the stock ticked lower in after-hours trading following its
release. The price dropped 3% on concerns about the tech giant's enormous
capital expenditures on AI. It slid another 1% on the day after the release. Nonetheless,
Microsoft still delivered an impressive set of numbers for its fiscal 2026
first quarter. For the period, which ended Sept. 30, revenue jumped 18% to
$77.7 billion, topping the analyst consensus at $75.4 billion. Its operating
margin remained strong, hovering near 50%, and adjusted earnings per share
jumped 23% to $4.13, well ahead of the analysts' consensus figure of $3.66. Like
its peers, Microsoft is showing no signs of slowing down its AI-related
spending as it responds to increasing demand for Copilot and other AI products.
Management said on the earnings call that it's "adding AI capacity at an
unprecedented scale," and that it plans to increase its AI capacity by
more than 80% in its fiscal 2026, which will end in June. However, one number
stood head-and-shoulders above the rest in Microsoft's latest report. Microsoft
may be best known for its Windows operating systems and its Office productivity
suite, but its most important product these days is likely Azure, its cloud
infrastructure business. Azure is the cornerstone of its AI strategy, and AI is
a large reason for Azure's recent success and its rapid growth. In fact, in the
quarter, Microsoft said revenue from Azure jumped 40%, though it doesn't report
specific dollar figures for Azure. That growth rate represents a significant
acceleration from recent periods. Revenue from its intelligent cloud division,
which includes Azure, could soon surpass revenue from its productivity
division. Azure's growth is also outpacing that of Google Cloud and Amazon Web
Services, the biggest cloud infrastructure service. Spending on Azure creates a
virtuous feedback loop for Microsoft: As its customers spend more on the
platform, that enables Microsoft to invest in increased capacity and new
features. The success of Azure also gives Microsoft cover to hike its capital
expenditures, though investors seem skeptical of those growing outlays. CFO Amy
Hood noted on the earnings conference call that demand for Azure services is
"significantly ahead of the capacity we have available." Given that
outlook, taking advantage of the stock's small sell-off this week makes sense
for investors. Microsoft not only has the fastest-growing cloud computing
business of the big three, but it's the most diversified business of any
"Magnificent Seven" company. OpenAI's recent restructuring also
solidifies its partnership and recognizes that Microsoft's stake in it is worth
$135 billion. With all that in its favor, Microsoft has earned the credibility
to ramp up its spending on AI.
NU Nu Holdings, one of Latin
America's fastest-growing fintech companies, has seen its stock rally nearly
80% since it went public at $9 in December 2021. But over the past 12 months,
its stock only rose 6% as the S&P 500 advanced nearly 20%. Let's see why it
underperformed the market -- and if it's worth buying as the bulls look the
other way. Nu owns NuBank, the largest digital-only direct bank in Latin
America. Its three biggest markets are Brazil, Mexico, and Colombia. By
streamlining its services online and locking in its customers with no-fee
credit cards, it expanded much faster clip than its regional brick-and-mortar
competitors. From the end of 2021 to the second quarter of 2025, Nu's total
number of customers soared from 53.9 million to 122.7 million, its activity
rate (its active customers divided by total customers) rose from 76% to 83%,
and its average revenue per customer (ARPAC) skyrocketed from $4.50 to $12.20. From
2021 to 2024, its revenue grew at a CAGR of 89%. It turned profitable on a
generally accepted accounting principles (GAAP) basis in 2023, and its earnings
per share (EPS) nearly doubled in 2024. That explosive growth was supported by
its rollout of more credit cards, lending services, e-commerce services, and
cryptocurrency trading tools. Over the past year, Nu's year-over-year growth in
customers and total revenues decelerated -- but its activity rate and ARPAC
rose as its average costs for serving each active customer held steady. Its
growth cooled off as it saturated the Brazilian market (where it serves over
60% of the adult population), faced tougher competition from other leading
fintech platforms like MercadoLibre's Mercado Crédito, and intentionally
throttled the expansion of its credit business as its non-performing loans
increased. Meanwhile, Nu's gross and net interest margins declined as it
expanded more aggressively in Mexico and Colombia -- where it only serves
roughly 13% and 10% of the adult populations, respectively -- to gradually curb
its dependence on the Brazilian market. Both of those smaller markets require
higher funding costs and credit loss allowances than Brazil. The expansion of
its lower-margin secured lending and payroll-backed loans business exacerbated
that pressure. That mix of slowing growth, slipping margins, and messy macro
headwinds in Latin America likely prevented the bulls from aggressively buying
Nu's stock. That might be why Warren Buffett's Berkshire Hathaway, which bought
107 million shares of Nu in late 2021, liquidated its entire stake over the
past 12 months. From 2024 to 2027, analysts expect Nu's revenue and EPS to grow
at a CAGR of 28% and 38%, respectively. Its business is gradually maturing, but
those are still incredible growth rates for a stock that trades at 20 times
next year's earnings. Nu's top like growth and margins should stabilize as it
scales up its business in Mexico and Colombia. Its recent application for a
U.S. bank charter also indicates it's interested in expanding overseas to curb
its long-term dependence on the volatile Latin American market. I believe Nu
has plenty of room to grow, and it still looks like a compelling investment
even though Warren Buffett sold the stock. It might stay in the penalty box for
a few more quarters, but it should soar higher over the next few years as it
penetrates its newer markets.
NVDA Nvidia has pretty much ruled the world of artificial
intelligence (AI) data centers in recent times, and this is thanks to the power
of its chips. The company's graphics processing units (GPUs) are the key tools
needed for both the development and use of AI -- they fuel the training of
models as well as the inferencing phase that involves the model actually
thinking through a problem and solving it. All of this has driven major revenue
growth at the company, and Nvidia even said recently that from the last quarter
of this fiscal year and through the four quarters of the coming year, it's
expecting half a trillion dollars of revenue so far. This is due to orders for
its current Blackwell system and the upcoming Rubin platform. This news is
fantastic, and Nvidia is proving that it will continue its data center
dominance. Now, in addition to this, Nvidia just made another move that should
be a game-changer -- allowing the company to expand its strengths into
something that's central to our daily lives. Let's check it out. As mentioned,
Nvidia already has proven itself in the field of AI -- and this has led to
soaring revenue that's reached record levels. For example, in the latest fiscal
year, total revenue topped $130 billion, up from about $27 billion just two
years ago. Customers have scooped up GPUs for data centers, and this should
continue as the data center ramp-up maintains momentum. Though Nvidia has stood
out with the market's top-performing GPUs, other players such as Advanced Micro
Devices and even Nvidia customers like Amazon offer their own AI chips -- so a
customer might use Nvidia GPUs but also may buy chips from these and other
providers. Since Nvidia chips are also the priciest, some investors have
worried that Nvidia eventually may lose some market share. I'm not convinced
that will happen considering the company's commitment to innovation, but this
still represents a risk. Recently, though, Nvidia made a move that could make
the company central to something used throughout the world on a daily basis:
telecommunications. Nvidia did this by partnering with telecom powerhouse Nokia,
and this agreement offers the chip designer access to a $3 trillion industry. Nvidia
just announced a new product, the Nvidia Aerial Radio Network Computer, or ARC
-- it's a programmable computer that can communicate wirelessly and process AI.
Nokia, transitioning to 6G technology, will use ARC as its base station, or
central point for wireless communications. The idea is to improve the speed and
quality of cellphone communications, and Nvidia may be on its way to playing a
central role in this. This deal could be a game changer for Nvidia because it
expands the presence of the chip designer well beyond the area of data centers
and into a trillion-dollar industry that's widely used and relied upon. By
making itself a key driver of telecom technology, Nvidia enters yet another
huge growth market -- and ensures that customers will depend on its innovations
in this field. So, what does this mean for you as an investor? Nvidia's latest
move reinforces that this company has what it takes to generate revenue growth
and stock performance well into the future -- and not just through GPUs for
data centers. The tech giant could become a dominant player in the world of
telecommunications thanks to this partnership with Nokia. This broadens
Nvidia's revenue opportunity -- and in an industry of worldwide importance. All
of this means that Nvidia's future growth won't depend only on selling GPUs to
data centers -- and that the company's technology and innovation already is
leading to additional and significant new revenue opportunities. This makes the
tech giant an excellent buy today and one to hold onto for the long term.
SPGI S&P Global reported third-quarter revenue of $3.89
billion, surpassing market expectations of $3.83 billion. The company achieved
notable financial success during this period, driven by robust revenue growth
and substantial margin improvement. SPGI continues to strengthen its position
as a preferred partner among leading global institutions by maintaining strong
customer relationships and adopting cutting-edge strategies for delivering
value. Additionally, SPGI has been advancing its organic innovation efforts and
recently acquired With Intelligence, a move aimed at enhancing its presence in
private markets. Insights into the company's long-term strategy, including its
benchmarks and differentiated data offerings, are expected to be discussed at
the upcoming Investor Day. This strategic approach is anticipated to support
profitable revenue growth in the years ahead. S&P Global Inc. is a leading
provider of data and benchmarks to capital and commodity market participants.
Its ratings business is the largest credit rating agency globally and the
company's most profitable segment. The market intelligence segment, which
offers desktop, data and advisory solutions, enterprise solutions, and
credit/risk solutions, is the largest by revenue. Other segments include
commodity insights, mobility, and indexes. With a market capitalization of
$144.42 billion, S&P Global operates within the financial services sector,
specifically in the capital markets industry. The company's strategic
positioning and diversified offerings make it a formidable player in its field.
S&P Global's financial health is underscored by several key metrics: Revenue
Growth: The company has demonstrated a 3-year revenue growth rate of 9.9%,
reflecting its ability to expand its market presence effectively. Operating
Margin: At 39.22%, the operating margin indicates strong operational
efficiency, although it has experienced a decline over the past five years. Net
Margin: The net margin stands at 27.3%, showcasing the company's profitability.
Debt-to-Equity Ratio: With a ratio of 0.36, S&P Global maintains a
conservative capital structure. Altman Z-Score: A score of 4.95 indicates
strong financial stability. Despite these strengths, there are warning signs,
such as insider selling activity and a return on invested capital that is less
than the weighted average cost of capital, suggesting potential inefficiencies.
S&P Global's valuation metrics provide insights into its market
positioning: P/E Ratio: Currently at 36.39, close to its 2-year low, indicating
potential undervaluation. P/S Ratio: At 9.93, this is near a 3-year low,
suggesting a favorable valuation. Analyst Recommendations: With a target price
of $609.23 and a recommendation score of 1.8, analysts show a positive outlook.
RSI: The RSI-14 is at 38.63, indicating the stock is approaching oversold
territory. Institutional ownership is high at 87.38%, reflecting strong
confidence from large investors, although recent insider selling may warrant
caution. While S&P Global demonstrates strong financial health, several
risks must be considered: Sector-Specific Risks: As a player in the financial
services sector, SPGI is exposed to regulatory changes and economic cycles. Beta:
With a beta of 1.13, the stock exhibits moderate volatility relative to the
market. Upcoming Catalysts: The company's Investor Day and strategic
acquisitions could impact future performance. Overall, S&P Global's robust
financial metrics and strategic initiatives position it well for continued
success, though investors should remain vigilant of potential risks and market
dynamics.
TSM Taiwan Semiconductor Manufacturing, the world's
largest and most advanced contract chipmaker, is often considered the
bellwether of the semiconductor market. Most of the top fabless chipmakers
outsource the production of their top-tier chips to TSMC's industry-leading
foundries. Over the past five years, TSMC's stock rallied 265% as the Nasdaq
Composite rose about 120%. It might be tempting to take some profits in TSMC
after that market-beating run, but I believe it's smarter to buy this
high-flying stock for five simple reasons. 1. TSMC dominates the high-end
chipmaking market. Over the past decade, TSMC deployed ASML's high-end extreme
ultraviolet (EUV) lithography systems -- which are used to optically etch
circuit patterns into silicon wafers -- before its two closest competitors,
Samsung and Intel. Those expensive upgrades helped TSMC pull ahead of its two
rivals in the "process race" to manufacture smaller, denser, and more
power-efficient chips. Meanwhile, other smaller foundries like UMC and
GlobalFoundries dropped out of that race and focused on producing larger and
older chips at lower prices. TSMC now controls 71% of the global foundry
market, according to Counterpoint Research. It also produces at least 90% of
the world's most advanced chips. That market dominance makes it an
irreplaceable linchpin of the global semiconductor market. It also makes it one
of the simplest ways to profit from the market's secular expansion. 2. The AI
boom will drive TSMC's stock even higher. In the third quarter of 2025, TSMC
generated 60% of its revenue from its smallest 3nm and 5nm nodes. In terms of
platforms, it generated 57% of its revenue from the high-performance computing
(HPC) market, which includes Nvidia's powerful data center GPUs. During its
third-quarter earnings report, TSMC raised its full-year revenue guidance from
around 30% growth to mid-30% growth. Most of that growth should be fueled by
the artificial intelligence (AI), HPC, and data center markets. On the earnings
call, CEO C.C. Wei noted the market's demand for AI chips "continues to be
very strong" and that its "conviction in the AI megatrend is
strengthening." In addition to Nvidia, TSMC also produces chips for other
AI-oriented chipmakers like Broadcom, Qualcomm, and AMD. Therefore, the AI boom
should drive TSMC's stock even higher over the next few years. 3. The
smartphone market is recovering. TSMC generated 30% of its revenue from the
smartphone market in the third quarter. Its largest smartphone customer is
Apple, which usually accounts for about a quarter of its total revenue. That
business suffered a cyclical decline in 2022 and 2023 as the 5G upgrade cycle
ended and inflation curbed consumer spending. But over the past two years, the
smartphone market stabilized as more consumers finally upgraded their older
phones to higher-end iPhones and Android devices. Its growth in India also
offset the stagnation of the saturated Chinese market. That stabilization
should complement the faster growth of its AI, HPC, and data center-oriented
markets. 4. TSMC's margins are still expanding. For the full year, TSMC expects
to post a gross margin of 59%-61% -- up from its gross margins of 56.1% in
2024, 54.4% in 2023, and 59.6% in 2022. Those margins are consistently rising
because its near-monopolization of the advanced chipmaking market gives it
nearly unlimited pricing power as the semiconductor market expands. TSMC's
gross margins might dip again in the semiconductor market's next cyclical
downturn, but the current AI boom might postpone that contraction for at least
a few more years. 5. TSMC stock still looks reasonably valued. From 2024 to
2027, analysts expect TSMC's revenue and earnings per share to grow at a CAGR
of 24% and 27%, respectively. Those are stellar growth rates for a stock that
trades at just 19 times next year's earnings. ASML, which is also a linchpin of
the semiconductor market but growing at a slower rate, trades at 35 times next
year's earnings. TSMC's valuations might be compressed by the persistent
concerns regarding a military conflict between mainland China and Taiwan, where
it still manufactures its highest-end chips. However, TSMC has been building
higher-end plants in other countries -- including the U.S., Japan, and Germany
-- to mitigate that risk. An actual invasion of Taiwan would also likely
trigger a worldwide stock market crash instead of just crushing TSMC, so
investors who expect that worst-case scenario to happen should probably avoid
most stocks. But if you don't expect that dreaded conflict to break out, then
TSMC is still a great stock to buy. It dominates a crucial link of the global
semiconductor supply chain, it's growing rapidly, it's profiting from the AI
boom, and its stock looks cheap relative to its growth potential.
TTD Digital advertising is a massive industry, worth
nearly $700 billion and rising. The Trade Desk has been a standout performer as
a leading independent advertising technology platform. Essentially, the company
helps brands advertise in digital spaces outside walled-garden ecosystems like
Alphabet's Google and Meta Platforms' Facebook. As a result, The Trade Desk's
stock has outperformed the broader market over its lifetime. But the stock
plummeted earlier this year after the company's poor earnings results snapped
its years-long streak of topping growth estimates. The Trade Desk was
navigating a transition to a new technology platform. On top of that,
uncertainty about the economy and a potential trade war weighed on growth
expectations. The stock seems to be building momentum again; shares have
climbed nearly 11% over the past month. Currently, The Trade Desk trades at
approximately 30 times its 2025 earnings estimates. Meanwhile, analysts are
looking for nearly 20% annualized earnings-per-share growth over the next three
to five years. If the company can return to its former expectation-beating ways
and rebuild the market's trust, the stock's current valuation leaves room to
build on its recent hot streak.
V One reason the market is spooked by tariffs is
that they could lead to inflation and, potentially, a recession, a bad outcome
for most people and corporations. Visa is better equipped than most to deal
with this issue. The company has a vast financial ecosystem, with millions of
cards in circulation bearing its logo. Spending won't be as strong in a
recession, which would affect Visa's sales, since the company earns revenue
from the fees it collects on each transaction it facilitates. However, Visa
would benefit from inflation, since its fees are calculated as a percentage of
the transaction amount. So, higher prices mean Visa pockets more, a dynamic
that may somewhat offset the impact of fewer transactions. Even beyond that,
Visa continues to have an attractive long-term growth runway. Cash and check
transactions are on the decline and being replaced by digital ones, partly due
to the growth of e-commerce, where cash isn't an option. Visa is benefiting
from that and should continue doing so, given its strong network effect. The
more Visa cardholders there are, the more merchants accept it as a form of
payment, and vice versa. That's why Visa has few direct competitors of note.
And the company still sees a massive worldwide opportunity. The stock looks
likely to perform well, and even better than the S&P 500, through the end
of the decade, and should become a trillion-dollar company by then.
WM No news.
Stock Picks:
HT:
Buy additional WM.
KS:
Evaluate UIC low-percentage and low performance holdings and add to positions or
sell as appropriate.
On Friday, October 3, 2025
the following order(s) filled:
Sold
75 VLTO @ $106.51/share; net $7988.25
Meeting adjourned at 3:43
PM.
Respectfully submitted by
Ken Bauman.
Next Meeting: Friday, November
7, 2025 at 2:30 p.m. at:
9676 Railroad St
Elk Grove, CA 95624
(916) 895-2397