May, 2026 Meeting
Minutes
May 29, 2026
The
monthly meeting of Unable Investment Club was held at Dust Bowl Brewing Company
on Friday, May 8, 2026. The meeting commenced at 3:10 pm with KS presiding for AE.
PR and CX were also in attendance.
Unable Investment Club has 2 openings.
The
Valuation and Member Status reports were reviewed and the checks were
collected.
Late:
None.
Old Business:
None.
New Business:
Jessica Gryzbek, wife and beneficiary of Joe Gryzbek
has decided to remain a member of UIC.
Thank you to Dave Bono for sending $50 for
refreshments and for a remembrance to Joe. Attendees shared memories and agreed
it was an honor to have Joe as a friend. He will be greatly missed.
Stock News:
AMT No news.
AAPL When the market is climbing, it's
easy to get excited about investing -- you might buy popular stocks of the
moment and benefit from their momentum or look for undiscovered treasures that
could be the next to soar. But when indexes slip, investors sometimes hesitate
to invest, worrying that, after they buy a stock, it will decline further. But
these times actually offer investors the best investing opportunities. This is
because you can get in on high-quality stocks at reasonable prices, and these
players may deliver strong returns over the long run. Technology stocks are the
perfect example of what to buy during such moments. Since they thrive in growth
environments, even the strongest names often falter during periods of market
uncertainty. Though the market isn't in a correction now, these events happen,
so it's a wise idea to prepare for them. This means planning which stocks might
make interesting buys the next time such a movement takes place. Let's check
out the smartest tech stock to buy during every market correction. It's not
what you'd expect. First, let's answer a key question. What is a market
correction? This is a decline of 10% to 20% in a major index, and it could
happen as a result of an external event or simply after a magnificent streak of
gains. Corrections may seem unsettling, but they offer investors something very
positive: many buying opportunities, particularly in the world of growth
stocks. With such a selection of growth stocks to buy, though, which one should
you consider buying during every market correction? You might think of the
hottest tech stocks that generally trade at high valuations -- after all,
during a correction, they surely will offer you a better entry point. And this
brings me to the subject of Apple's moat, which has led to a long track record
of earnings growth. Apple's moat involves the strength of its brand. The
company has maintained a customer retention rate of about 90% as users return
for the latest update of the iPhone -- and today this is leading to an entirely
new revenue opportunity, the sales of services. So, now that Apple has a
massive user base -- and one that sticks around -- the company can count on
selling these customers everything from digital entertainment to storage. This
means Apple benefits when it sells the device and on an ongoing basis, as the
customer pays for services. Apple has reported record services revenue in
recent quarters, and it's very likely that this will continue. It's also
important to note that, during a market downturn, customers wouldn't
necessarily abandon their Apple devices or switch to another brand -- instead,
they might delay an upgrade. So, while Apple's revenue could slip during a
tough economic phase, this situation is likely to be temporary -- and an
improving economy could actually spur a significant gain as individuals who
delayed buying a new phone rush to make the move. Apple's earnings and stock
performance, shown above, support this idea. Meanwhile, at times when the
Nasdaq has declined, Apple has offered investors opportunities to get in on the
stock at bargain prices, as you can see in the following chart. And even during
times of market growth, Apple's valuation hasn't reached ridiculously high
levels. Instead, it's fluctuated within a reasonable range -- this is positive
because it leaves the stock room to run. All of this means Apple is a fantastic
stock to buy during every market correction and one to hold onto as the market
recovers and goes on to climb.
AMAT No news.
BWXT Nuclear is one source of energy that
could help meet the growing demand for electricity with no carbon emissions.
Nuclear energy is regaining favor, and the U.S. aims to aggressively quadruple
its nuclear capacity by 2050. An expansion this large would require massive
investment and a huge build-out of nuclear energy infrastructure and its
components. That's where BWX Technologies has its growth opportunity. The
company doesn't mine uranium or own nuclear power plants. But it does provide
specialized, complex, high-precision equipment used in nuclear reactors,
including steam generators, reactor pressure vessels, and piping. While the
nuclear energy build-out provides upside for BWX, the company also generates a
steady revenue stream from its role as the sole nuclear fuel provider to the
U.S. Navy. For over 70 years, the company, through its subsidiary Nuclear Fuel
Services, has been the exclusive supplier for Navy aircraft carriers and
submarines. Because of the complexity and sensitivity of military-grade reactor
cores, it's difficult to knock BWX off its perch, giving the company a robust
competitive advantage. BWX Technologies has a resilient backlog that will
provide cash flow for years to come. The company is also expanding into the
small modular reactor (SMR) market, uranium enrichment, and medical isotopes,
providing multiple avenues for growth. For investors bullish on the future
nuclear energy expansion, BWX Technologies is another excellent industrial
stock to own today.
CAT The war in Iran commenced on
Feb. 28, meaning March 2 was the first trading day on which investors could
express their views on the conflict. Over the next three weeks, the S&P 500
dipped 4.4%., the second-largest member of the Dow Jones Industrial Average,
was worse for wear, tumbling 6.7% over those three weeks. However, the
industrial stock has since rebounded epically, gaining 9.9% for the month-long
period ending May 22. That price action suggests Caterpillar is a buy, even if
the war in Iran hasn't been officially resolved. But is it? Caterpillar stock
was punished when the war in Iran started, but it has rebounded in a big way. Assuming
the ceasefire holds, or the U.S. and Iran reach a deal to end the conflict,
Caterpillar can retain the buy label and potentially position itself to make a
run at the four-figure club. Maybe even as soon as next year. Maybe sooner.
Let's examine what needs to go right for this stock to reach that rarefied air.
As it relates to the intersection of Caterpillar stock and the Iran war,
there's at least one certainty: any renewed escalation of military action would
likely weigh on the shares. The markets' initial reaction to the start of the
war included punishment of cyclical stocks, of which Caterpillar is one, and
materials stocks. That's relevant because the industrial machinery giant counts
materials companies among its clients. Still, it's not a stretch to say
Caterpillar's March weakness amid geopolitical volatility was more
sentiment-driven than it was an indictment of the company's fundamentals. The
company posted a 22% jump in first-quarter sales, which is impressive in its
own right and even more so when considering that March is part of that quarter.
The company also emerged from the quarter with a record backlog, indicating
that customers continued to make purchases even as tensions flared in the
Middle East. Caterpillar's top-line resilience in the face of geopolitical
headlines is largely driven by its status as the industrial face of the
artificial intelligence (AI) boom. In simple terms, a hyperscaler or real
estate developer setting out to build a new AI data center needs gear
manufactured by Caterpillar or one of its competitors. That proof is in the
pudding. Caterpillar's power and energy unit notched a 22% increase in
first-quarter sales, with the company overtly highlighting data centers as a
catalyst behind that jump. The industrial company's data center exposure isn't
a 2026 phenomenon, though CEO Joe Creed acknowledges some customers are pushing
to start work right away. Importantly, Creed also noted on the company's
earnings conference call that some of the machinery giant's booked orders
extend into 2028, indicating that, war or not, Caterpillar can offer investors
some of the visibility they crave. Caterpillar's status as one of the largest
industrial companies is undoubtedly strengthened by its exposure to AI. It is a
testament to management's ability to swiftly pivot into a high-octane category
and grab pole position in that space. However, there are other reasons to like
this stock, including its exposure to industrial reshoring. Spending on new
American manufacturing facilities is surging, confirming that there's solid,
potentially durable long-term demand for Caterpillar gear that AI doesn't
drive. The reshoring theme is one for Caterpillar investors to monitor, as it's
top of mind for politicians in both parties. Second, Caterpillar's shareholder
rewards efforts weren't hindered by the war in Iran. In the first quarter, the
company spent $5 billion on stock repurchases (presumably some of which was
spent after the war started) and $700 million on dividends. The company
concluded the quarter with $4.1 billion in enterprise cash, confirming it has
the capacity to continue reducing its share count while compensating
shareholders with cash dividends. Those factors add to the "buy"
label.
CNI Canadian National Railway
operates approximately 20,000 miles of railroad across the U.S. and Canada, and
connects the Pacific, Atlantic, and Gulf of Mexico coasts. That T-shaped
network supports seamless cross-border shipping without transfers to other carriers.
It's diversified across a wide range of sectors -- including bulk commodities,
shipping containers, industrial and energy products, and automotive products --
so it isn't dependent on a single industry. That scale and diversification make
it one of the market's most reliable transportation stocks. From 2025 to 2028,
analysts expect its EPS to grow at an 8% CAGR. It still looks reasonably valued
at 21 times this year's earnings, and it pays a forward dividend yield of 2.3%.
Canadian National Railway faces three near-term challenges: the unresolved
tariff negotiations between the U.S. and Canada, which could impact
cross-border trade; higher oil prices and catch-up costs from a previous labor
dispute, which are driving up its operating costs; and the proposed merger
between Union Pacific and Norfolk Southern, which would create a major
competitor and America's first true transcontinental railroad. Nevertheless,
Canada's ongoing exports of oil products, grain, and fertilizer should offset a
lot of that near-term pressure. Its recent completion of a major investment
cycle (to expand its Chicago EJ&E bypass) should also reduce some of the
pressure on its margins and earnings. So, if you're looking for a conservative,
dividend-paying logistics play that will bounce back from the next market
crash, Canadian National Railway checks all the right boxes.
COST Shares of Costco Wholesale were
heading lower today (May 29) after the company delivered solid results in its
fiscal third-quarter earnings report, but they weren't quite enough to please
Wall Street as high expectations were baked into the stock coming into the
report. As of 10:58 a.m. ET, the stock was down 4.6% on the news. Since Costco
reports monthly revenue and comparable sales, there aren't too many surprises
in its quarterly report, but the retail giant still managed to top estimates. Costco
reported comparable sales growth adjusted for gas and foreign currency of 6.6%,
and overall revenue rose 11.6% to $70.53 billion, ahead of expectations at
$69.81 billion. Growth was driven by record gasoline volumes as consumers
looked to Costco for savings during the quarter. Earnings per share rose from
$4.28 to $4.93, meeting expectations. Digitally enabled sales rose 21.5%,
showing Costco's e-commerce investments are continuing to pay off, and CEO Ron
Vachris told investors that gas customers tend to spend more than the average
customer in the warehouse, making the additional fuel traffic valuable. There
weren't any red flags in the report, and the analysts who weighed in on the
report mostly raised their price targets on the stock. Costco's valuation is
still a headwind on the stock, and it seems to be the reason why the stock sold
off. The move was predictable as Costco often pulls back following its earnings
report, as the company's valuation is hard to justify from its growth. The
premium in the stock comes in part from Costco's resilience and economic moat. Over
the long term, the stock still looks like a winner, but with a
price-to-earnings ratio of 49, investors should expect more bumps like today's.
EME Emcor, based in Norwalk,
Connecticut, focuses on mechanical and electrical construction and facilities
services in the United States and the United Kingdom. Data centers require
massive cooling systems and complex electrical layouts to handle high-density
computing. Emcor's recent guidance hike was largely driven by a record $15.6
billion backlog, up 32.9% year over year, much of which is tied to these
high-margin, technically demanding projects. In the first quarter, Emcor
reported record revenue, record earnings per share (EPS), and a record backlog.
The company said it had quarterly revenue of $4.63 billion, up 19.7% year over
year; EPS of $6.84, up 30% over the same period last year; and a backlog of
$15.62 billion, up 32.9% year over year. The numbers were good enough that
Emcor raised its yearly revenue guidance to $18.5 billion to $19.25 billion, up
from prior guidance of $17.75 billion to $18.5 billion. It also lifted its
yearly EPS estimate to between $28.25 and $29.75, up from a range of $27.25 to
$29.25. Over the last decade, Emcor has used its strong free cash flow to buy
back shares, including a recent $500 million buyback pledge, and acquire
smaller, specialized firms, effectively growing its EPS even when the broader
economy is flat.
GOOGL If there were any doubts, they are
certainly put to rest by now. Artificial intelligence (AI) stocks have
legitimate staying power and appear destined to be one of the biggest long-term
drivers in the stock market for the next several years. Not even a
first-quarter swoon in AI stocks has derailed the market rally. The Nasdaq CTA
Artificial Intelligence Index, which tracks the performance of companies
involved with AI in the tech, industrial, medical, and other economic sectors,
is up nearly 40% this year -- with 30% of that gain coming in the last 90 days.
I've been bullish on the tech sector and AI opportunities for several years.
And as I look at the sector and seek stocks with a strong growth trajectory
that also fit my buy-and-hold philosophy, there's one name that stands out as
perhaps the best long-term opportunity in the AI space. For everything that
Alphabet is involved in -- YouTube, the Android operating system, Waymo
robotaxis, and more -- Alphabet's roots are in advertising. And that's the
engine that funds Alphabet's AI ambitions. Alphabet's revenue in the first
quarter was $109.89 billion, up 22% from a year ago. And most of that money
came directly from advertising. In all, Alphabet received 81.5% of its Q1 2026
revenue from advertising sources. In its financial statements, Alphabet
includes revenue from Google subscriptions, platforms, and services in its
Google Services segment, which is largely made up of advertising. The company
reported operating income from that segment of $40.59 billion, which gives it
an operating profit margin of 45.2% from Google Services. There are a few
notable reasons for Google's advertising dominance. First, the company has the
most widely used search engine and browser on the planet. Google Search had a
90% global market share in April, and its Chrome browser had a 68% market
share. Those advantages alone give Google a wide competitive moat. On top of
that, the company is leveraging AI to make its advertising more impactful. The
company is deploying Google Gemini, its intelligent assistant and family of AI
models, across its ad infrastructure. "This is driving significant
improvements across all areas of marketing, and continues to fuel new
performance breakthroughs across three areas critical for our customers'
success: ads quality, advertiser tools, and new AI user experiences,"
Chief Business Officer Philipp Schindler said on the recent earnings call. Through
its dominant market share and the company's powerful AI tools -- both in its
advertising platform and through its AI Overviews, which are AI-generated
summaries that appear at the top of search results -- Alphabet is positioned to
maintain its internet advertising stranglehold. Compared to advertising
revenue, Alphabet's cloud computing segment is tiny. But don't sell the
potential of Google Cloud short, because its rapid growth is drawing a lot of
investor and analyst attention. Google Cloud generated $20.02 billion in
revenue in the first quarter, a whopping 63% increase from a year ago. Google
Cloud has 14% of the global cloud infrastructure service market, putting it in
third place behind Amazon Web Services (28%) and Microsoft Azure (21%). The
segment's operating income was $6.6 billion, tripling from a year ago, and its
operating margin improved from 17.8% to 32.9%. And it appears that the growth
in Google Cloud revenue will only accelerate. Alphabet has been making Tensor
Processing Units (TPUs), which are chips specifically designed for machine
learning and advanced AI workloads. TPUs are Google's in-house alternative to
Nvidia's popular, but extremely expensive, graphics processing units (GPUs).
And now that it's selling them to other companies, TPUs will be an important
revenue source for Google Cloud. Google Cloud's backlog at the end of the first
quarter was $462 billion, nearly doubling on a sequential basis. Management
said the rapid increase was fueled by a combination of enterprise AI offerings
and the availability of Google's TPUs. Alphabet expects to convert more than
half of that backlog to revenue in the next 24 months. If that's the case, then
the $20 billion Google Cloud generated this quarter is going to look like
peanuts in just a couple of years. After a slow start to the year, Alphabet
stock has really heated up over the last few weeks. The stock is now up 25% on
the year and is currently trading less than 3% from its all-time high. The
advertising engine is more powerful than ever, and the company will generate
hundreds of billions of dollars over the next two years from its fast-growing
Google Cloud business. As I look at rebalancing my portfolio for the second
half of the year, I'll be adding Alphabet shares as one of my core AI stocks,
and then holding on to them for the long term.
LIN Linde is a global industrial
gas and engineering company generating nearly $35 billion in trailing revenue.
It's not a high-growth story like Rocket Lab or Redwire, but it offers steady
performance -- and it has direct ties to SpaceX. Last year, Linde began
construction on a $100 million air separation plant designed to produce liquid
oxygen and nitrogen -- essential for rocket propulsion. The location is key:
it's less than 50 miles from Starbase, Texas -- the home of SpaceX. That proximity
hints at the level of demand Linde expects from the industry leader. Momentum
in Linde's aerospace business is building as investment increases across
launches, vehicle manufacturing, and testing. In the first quarter, the company
reported 8% year-over-year growth in total revenue. Still, management
specifically noted that activity around space vehicle production, testing, and
launch continues to show strong growth. Aerospace is still under 5% of sales,
but it could become a larger contributor as the frequency and size of space
launches grow over the next decade. For investors seeking a durable business
that will benefit directly from SpaceX's future activity, Linde fits the bill.
MSFT Rarely over the course of its
existence has Microsoft not been a good stock to buy and hold. It's now one of
the largest and most successful companies of all time. But as the market heads
toward its next earnings season, this is a particularly good time to buy
Microsoft stock. Here are three reasons why. Over the past decade, Microsoft
stock has rarely been as cheap relative to its earnings as it is right now. It
is trading at around 24 times earnings and 21 times forward earnings. The last
time it was anywhere near this cheap was during the bear market of 2022. The
last time before that was in 2018. Microsoft stock is down about 12% year to
date, and off by about 21% from its October peak. Part of the reason for the
sell-off was that, after a three-year bull market, Microsoft was a tad
overvalued at the end of 2025, as were most big tech stocks, so many investors
likely cashed out. But unlike other "Magnificent Seven" tech giants
such as Amazon and Nvidia, Microsoft has not bounced back from its
first-quarter retreat. This is primarily due to investors' concerns about its
massive capital expenditures on artificial intelligence (AI), its slowing AI
cloud growth, and its declining free cash flow.
In addition, it may have been tainted by concerns about OpenAI's path to
profitability, given that OpenAI is a major Microsoft partner. In the next
fiscal quarter, Microsoft should start to reap the benefits from its latest
agreement with OpenAI. In summary, Microsoft will remain OpenAI's primary cloud
partner, and it will retain its license to use OpenAI intellectual property
(IP) for models and products through 2032. But their relationship is no longer
exclusive; Microsoft can now form new partnerships, such as its recently
expanded relationship with Anthropic. Further, Microsoft will no longer pay a
revenue share to OpenAI, but OpenAI's revenue share payments to Microsoft will
continue through 2030. In addition, Microsoft remains a major shareholder in
OpenAI. These changes will reduce Microsoft's overall exposure to OpenAI while
likely boosting the profits it accrues from the company. While Microsoft's
revenue share is capped, the overall result should be a net positive for it.
Analysts at Wedbush predict that it will result in $6 billion in income from
OpenAI, up from the previously anticipated $4 billion. This will help alleviate
investors' concerns about the tech giant's cash flow. On May 1, the company
rolled out Microsoft 365 E7, its first major update to the popular software
suite since 2015. The Microsoft 365 E7 platform is designed for businesses and
includes Microsoft Office, agentic AI through Copilot, Teams, cybersecurity, and
other products all in one package. It also features a new product, Microsoft
365 Agent, which the company describes as a "control plane that extends
companies' existing governance, identity, security, and management frameworks
to agents." In other words, it helps companies use, manage, and monitor AI
agents across the enterprise, not just Microsoft AI agents. The company is
charging $99 per month per user for Microsoft 365 E7, and the platform is
expected to generate significant revenue. The last update, E5, goes for about
$60 per month per user, so if even a fraction of its clients upgrade
to the new service, it would represent a meaningful revenue increase. Analysts
at Evercore say the E7 platform could boost Microsoft's revenue by 2.4% to 2.5%
in the next fiscal year. Overall, 95% of analysts covering Microsoft rate it a
buy. It has a median 12-month price target of $550 per share, which is about
30% higher than its current price. Beyond those near-term catalysts for the
stock price, there are longer-term tailwinds. Microsoft should also benefit
from the major investments it's making in data centers and AI infrastructure. So,
I would not be surprised to see the stock rise heading into the next earnings
season.
NU Investors might think that the
world of financial services is generally a boring area to park capital for
growth. But Nu Holdings proves that this perspective is wrong. The Latin
American fintech stock, which has climbed 93% in the past three years (as of
May 27), has expanded rapidly. As of March 31, the online bank counted 135
million customers, up 71% from exactly three years ago. This figure is more
than what most U.S. banks currently have. What matters most, though, is not
necessarily the total customer count. Investors should care what Nu earns from
each one. Absolute growth metrics get a lot of attention. Monetization is
crucial as well. During the first quarter of 2026, Nu reported average revenue
per active customer (ARPAC) of $15.90. This number has steadily risen, and it's
up 23% year over year on a currency-neutral basis. On the other side of the
equation, it cost Nu just $1 to serve each of these customers in the first
quarter. That's a wide gap when compared to its ARPAC. And it certainly helps
to explain why the company was able to post a 16.4% net profit margin in the
latest quarter. This was also supported by credit quality that remains within
historical levels. Nu's biggest market, without a doubt, is Brazil, where 83%
of its customers are active on a monthly basis. The fintech is still in the
early innings in Mexico, but success is notable. On the first-quarter earnings
call, CEO David Velez said: "In four years, our customer base there has
grown from just over 2 million to 15 million today, roughly seven times larger.
ARPAC has nearly doubled, even as we have onboarded millions of newer, less
mature customers." The business is also approaching 5 million customers in
Colombia. As Nu further penetrates newer markets, they should start to have a
bigger impact on the financials. A huge customer base puts Nu in a very
favorable position, especially in the financial services industry. That's
because it raises cross-selling opportunities, because people generally need a
variety of financial services over time. The combination of both variables --
customer growth and monetization -- is what can drive the best outcome for Nu,
which is profitable expansion. The last thing that investors want to see from
this business is for customer additions to materially weaken. And if it starts
to post softer monetization rates, it might also be a reason to worry. Right
now, though, investors should remain bullish. This company is operating at a
high level.
NVDA Nvidia has been the biggest
beneficiary of the massive investments in artificial intelligence (AI) data
center infrastructure over the past few years. Its chip systems have been
widely deployed by hyperscalers, governments, and AI companies to support the
training and deployment of AI models. However, AI is now moving from data
centers into edge applications, such as smartphones, drones, vehicles, robots,
industrial automation, and healthcare. Edge AI devices can process AI workloads
locally rather than sending them to the cloud, enabling them to make real time
decisions quickly. The good news for Nvidia stock investors is that the company
is already minting money from the growth of edge AI applications. Physical AI
refers to the integration of AI into edge devices, such as cars and robots,
enabling them to make real-time, autonomous decisions. Robotaxis, robotic arms
in factories, and humanoid robots are examples of physical AI. Market research
firm Counterpoint Research estimates that physical AI device shipments could
reach 145 million units cumulatively between 2025 and 2035. The research firm
adds that robots, autonomous vehicles, and drones will drive this market's
growth. Nvidia has already started capitalizing on this opportunity. The
company noted on its latest earnings call that its physical AI revenue has
exceeded $9 billion over the trailing twelve months. For comparison, Nvidia's
physical AI revenue came in at $6 billion in fiscal 2026. So, the quarterly
revenue run rate of Nvidia's physical AI business increased by 50%.
Importantly, this segment is poised to grow at a stronger pace. That's because
the company is partnering with key players in physical AI. As pointed out by
CFO Colette Kress on the recent earnings call: Our partnership with Uber will
power the robotaxi fleet across nearly 30 cities and 4 continents by 2028. And
in robotics, leading companies across a range of industrial, surgical, and
humanoid applications are building on Nvidia's technology, to develop and
deploy at scale. CEO Jensen Huang also recently noted that $5 trillion will be
spent on building factories across the globe. Major manufacturers such as TSMC,
Pegatron, Wistron, Foxconn, and others are already using Nvidia's platform to
build digital twins of factories before beginning actual construction, and
importantly, they are integrating physical AI solutions to boost output. One
little-known company, called an "Indispensable Monopoly" owns the
technology Nvidia, AMD, and Intel cannot function without. And it is still just
a fraction of Nvidia’s size. Nvidia's focus on expanding its addressable
opportunity by entering new markets should help sustain its phenomenal growth.
Physical AI isn't the only new space that Nvidia is targeting. Its decision to
sell its Vera server central processing units (CPUs) as a stand-alone product
is will help the company generate an additional $20 billion in revenue this
year. Nvidia has traditionally offered its server CPUs as part of its
rack-scale server solutions that include other chips. However, the company
couldn't ignore the stand-alone demand for these chips, and management believes
that the decision to sell its Vera CPUs to customers has opened a potential
$200 billion addressable market. Nvidia reported $4.77 in earnings per share
for fiscal 2026 (which ended in January this year). The consensus estimate of $15.64 in earnings per share for fiscal 2029
suggests that Nvidia's bottom line will grow at a compound annual growth rate
(CAGR) of 48%. With shares trading at 33 times earnings, a discount to the
tech-laden Nasdaq-100 index's earnings multiple of 35.6, this AI stock is a
no-brainer buy right now. The company is anticipating investments in AI
infrastructure to reach an annual run rate of $3 trillion to $4 trillion by the
end of the decade, which means that its core data center business is poised to
keep growing nicely. Throw in additional catalysts, such as physical AI, and it
is easy to see why buying and holding Nvidia for the long run makes sense.
SPGI Most investors know S&P
Global as one of the world's leading credit rating businesses. But over the
years, the company has evolved into something more than that. Today, S&P
Global spans benchmark indexes, commodity intelligence, enterprise analytics,
and automotive intelligence through its Mobility division. And that last
segment may be creating an interesting opportunity for shareholders. Why?
Because S&P Global is preparing to spin off its Mobility business into a
separate publicly traded company. In many ways, investors may effectively be
getting a "buy one, get one free" deal: ownership in S&P Global's
core financial infrastructure platform, while also receiving exposure to a
stand-alone automotive intelligence business that the market may not yet fully
appreciate. For years, S&P Global's identity was tied closely to credit
ratings. That business still matters enormously today. Whenever corporations or
governments issue bonds, investors often rely on S&P's ratings to evaluate
risk. But the company has gradually transformed into something much larger.
Today, S&P Global also owns benchmark index businesses tied to trillions of
dollars in exchange-traded funds (ETFs) and passive investment products. It
operates major commodity pricing platforms and enterprise analytics systems
used throughout global financial markets. In other words, the company has built
an ecosystem deeply embedded in capital markets, investment workflows, and
institutional decision-making. That creates an unusually strong business model.
For instance, as passive investing continues to expand globally, S&P
benefits from licensing revenue tied to its index platforms. Similarly, as
financial markets grow and become more complex, demand for ratings and
financial analytics tends to rise. Importantly, many of these operations
generate recurring revenue, have high switching costs, and exhibit strong
operating leverage. That is why S&P Global increasingly resembles less of a
traditional financial company and more of a long-term financial infrastructure.
Originally built through the IHS Markit acquisition, S&P Global Mobility
provides automotive data, software, and analytics to automakers, suppliers,
insurers, and dealers worldwide. As the automotive industry becomes
increasingly driven by software, connectivity, electrification, and data,
vehicles themselves are evolving into more technology-intensive platforms,
creating rising demand for industry intelligence and analytics. That trend sets
up the Mobility business for sustainable growth in the years to come. Inside
S&P Global, however, Mobility may not receive the type of valuation
investors typically assign to stand-alone software or data businesses. Besides,
the existing management team may not have enough bandwidth to give this
business the attention it needs. That is where the spin-off becomes a
compelling move. Historically, stock spin-offs have often unlocked shareholder
value because markets tend to undervalue complex companies operating multiple
businesses under one structure. Investors frequently apply a blended valuation
that fails to fully recognize the strengths of each segment independently. After
the separation, the market may begin valuing these businesses differently. The
core S&P Global business could emerge as a cleaner, more focused platform
centered on ratings, indexes, analytics, and market intelligence. At the same
time, Mobility may gain greater visibility as a stand-alone business with its
own growth profile. So far, Wall Street seems to be giving little credit to
this corporate exercise. In fact, the share price has fallen by about 25%
during the past 12 months. On one level, many investors continue treating the
company primarily as a credit rater. But beneath the surface, the business has
quietly been riding several long-term trends, including passive investing,
financial data analytics, commodity intelligence, and the growing complexity of
global capital markets. But the same evolution has made it difficult for
investors to understand the company's long-term prospects. Thus, the Mobility
spin-off may help simplify the whole group, making it easier for investors to
value both businesses separately. And if that happens, shareholders today may
end up owning two potentially valuable businesses.
TSM When investors look at
artificial intelligence (AI) stocks, the biggest challenge is choosing which
avenue is the best bet -- because nearly everywhere you look, there are
multiple names from which to choose. Want to invest in AI chips? Nvidia is the
biggest player, but it's challenged by Advanced Micro Devices and Broadcom.
Hyperscalers like Amazon and Alphabet are designing their own chips, with an
eye on reducing their dependence on outside companies. And there's a new stock,
Cerebras Systems, with a successful IPO, making chips more powerful than
Nvidia's. It's already making some waves. Maybe cloud computing and AI
infrastructure are better options? Good luck there, as Amazon, Microsoft, and
Alphabet's Google Cloud are battling for supremacy. Want to invest in data
centers? Your choices include Nebius Group, Iren, CoreWeave, and data center
real estate investment trusts such as Digital Realty Trust and Equinix. Get the
picture? There are choices everywhere. So, if you really want the closest thing
you can find to a sure thing in the AI space, the best bet you can make is on a
company that has such a massive advantage that the top companies -- many of
which we've already talked about here -- have no choice but to be customers. Taiwan
Semiconductor, also known as TSMC, doesn't make its own chips. But it's a
foundry -- the largest foundry in the world that makes chips designed by other
companies. And the growth of AI has had a dramatic impact on TSMC's revenue --
and how it gets its money. Since 2020, the percentage of revenue from
high-performance computing chips has skyrocketed, as have TSMC's revenue and
profitability. In the first quarter, TSMC generated $35.9 billion in revenue
with a whopping 50.5% net profit margin. The company reported earnings per
share (EPS) of 22.08 New Taiwan dollars ($0.70). That's a vast jump from just
three years ago, when TSMC had $19.6 billion in Q1 revenue and EPS of $0.29. And
even more tellingly, TSMC's improving technology is driving sales. In the most
recent quarter, 61% of its revenue came from making 3-nanometer and 5nm chips,
which have smaller transistors than 7nm and larger chips, meaning they can hold
more components and are more powerful. In the first quarter of 2023, 67% of
TSMC's revenue came from making chips 7nm and larger. TSMC has an estimated 70%
of the total market's chip manufacturing revenue and counts Nvidia, Intel,
Broadcom, Qualcomm, Apple, and other big names as its customers. Intel is a
potential competitor, but it has yet to secure an anchor company for its fledgling
foundry business. That leaves TSMC as the best -- and for some chipmakers only
-- viable option. TSMC stock is up 33% so far this year, and all indications
are that it will continue to move higher as the growth of AI fuels its
business.
V Financials have been one of
the worst-performing sectors year to date as economic uncertainty, inflationary
pressures, elevated interest rates, weak consumer spending, and a sluggish
housing market are dragging down the sector. Visa is down 6.2% year to date --
which isn't as bad as the 12.7% and 15.7% sell-offs in Mastercard and American
Express, respectively. Investors are getting an incredible opportunity to scoop
up shares of Visa for a highly reasonable 30 times free cash flow and 29 times
earnings. Visa has one of the best business models in the world. Financial
institutions partner with Visa to use its global payments network, with Visa
collecting fees based on transaction sizes and frequency while its partners
bear the credit risk. That dynamic makes Visa insulated from the risk of
customers defaulting on their credit card debt. However, earnings growth will
slow if households and businesses are spending less with their cards, which is
why Visa and its peers are seeing their stock prices fall. Despite the economic
headwinds, Visa continues to generate double-digit revenue and earnings growth,
including a 9% increase in payments volume and processed transactions in its
latest quarter. Due to its low operating expenses, Visa sports sky-high operating
margins, which support a healthy shareholder capital return program. Visa's
dividend yield is low, at 0.8%, but the $1.3 billion it spent on dividends in
its latest quarter was dwarfed by $7.9 billion in share buybacks. That capital
return strategy has paid off incredibly well for shareholders, given Visa's
outstanding long-term performance.
WM It's a clichéd observation that
the world never stops producing trash. That doesn't make it wrong, though.
According to the EPA, in fact, every person living in the U.S. creates about 5
pounds of garbage every single day. If the economy cranks up and spurs consumer
demand for more domestically made goods and services, don't be surprised to see
that figure ramp up, or as it used to be known, Waste Management. The company
operates over 260 landfills across the United States (plus a few in the U.K.)
in addition to more than 500 transfer facilities, over 100 recycling centers,
and a handful of medical waste incinerators. The company did $25.2 billion
worth of business last year, up 14%, turning $3.0 billion of that into net
income. It's not a sexy investment by any stretch of the imagination,
particularly compared to nearly any AI stock. It's a fairly slow-moving company
in a fairly slow-growing business. It's also, well, garbage. The simple
industry's been around forever and hasn't exactly been improved by
technological developments. Don't dismiss the near- and long-term growth
potential of America's waste-disposal industry, though. With the nation's and
the world's population still growing, resulting in a growing amount of annual
waste with a decreasing number of places to put it, the World Bank believes the
global municipal waste management business is poised to grow from $250 billion
now to $426 billion by 2050. WM is positioned to capture at least its fair
share of this growth simply because the country and the planet are soon going
to be relying on it and its peers to solve an underestimated problem that few
people fully appreciate is brewing.
Stock Picks:
PR: Buy MP Materials Corp. (MP), engages in the
production and marketing of rare earth specialty materials. It operates through
the following segments: Materials and Magnetics. The Materials segment focuses
on the operation of Mountain Pass, which produces refined rare earth oxides and
related products, as well as rare earth concentrate products. The Magnetics
segment is involved in the operation of Independence Facility, where the
company began production of magnetic precursor products.
KS: Buy additional American Tower (AMT) which seems
to be undervalued and has a 4% dividend. Buy additional Nu Holdings Ltd. (NU).
On
Tuesday, May 12, 2026, the following order(s) filled:
Buy 77 MP @ $64.6699/share; total $4979.58
Buy 28 AMT @ $177.72/share; total $4976.16
Meeting
adjourned at 3:44 PM.
Respectfully
submitted by Ken Bauman.
Next Meeting: Thursday,
June 4, 2026 at 2:30 p.m. at:
3054 Sunrise Blvd Suite J
Rancho Cordova, CA 95742
(916) 706-0343