August, 2026
Meeting Minutes
August 28, 2026
The
monthly meeting of Unable Investment Club was held at Dust Bowl Brewing in Elk
Grove on Friday, August 7, 2026. The meeting commenced at 1:50 pm with KS
presiding for AE. JL, PR, HT, CX, DK and prospective new member Ann Totherow
(spouse of Barry Dye) 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:
Tim Walls (GQ) was paid his requested withdrawal of
$10,000 by check on July 8, 2026.
New Business:
None.
Stock News:
AMT No news.
AAPL Apple Inc is expected to make a
significant entry into the foldable phone market, which could potentially cause
a considerable surge in its shares, as per Rothschild & Co. Rothschild
& Co. analyst Timm Schulze-Melander suggested that the market hasn’t fully
recognized the potential influence of a foldable iPhone on Apple’s growth.
Schulze-Melander communicated to clients that Apple’s product roadmap’s
strength and its potential entry into the foldable handset market seem to be
undervalued, reported CNBC on Monday. Analyst Timm Schulze-Melander upgraded
Apple to Buy from Neutral and raised his price target to $400 from $260,
signaling significant upside for the iPhone maker. "The strength in
Apple’s product roadmap and entry into foldable handsets appears
underappreciated by the market," Schulze-Melander said. The analyst
predicts that Apple’s venture into the ultra-premium foldable handset sector
could increase iPhone average selling prices (ASPs) by 11% by June 2027. He
also anticipates sales of 14 million iPhone Ultra foldable handset units in
FY27, with a minimal impact of 2% from cannibalization of sales from traditional
iPhones. The analyst also mentioned that the potential foldable iPhone would
cater to an ultra-premium segment of the handset market, which is in line with
Apple’s brand positioning. Despite a recent 8% drop, Apple shares have seen a
13% increase year to date. In July, Counterpoint Research projected that Apple
could capture a 25% share in the foldable phone market in its first year. This
forecast was based on the anticipated launch of Apple’s foldable iPhone. However,
earlier, analyst Ming-Chi Kuo suggested that Apple’s foldable iPhone might
arrive later than the rest of the iPhone 18 lineup due to supply constraints.
Apple’s first foldable iPhone could see 7 million to 8 million units assembled
in the second half of 2026, according to Kuo. However, third-quarter shipments
may be limited to just 500,000 to 1 million units, far below expected iPhone 18
Pro and Pro Max volumes. Due to constrained supply, Apple could unveil the
foldable iPhone alongside the iPhone 18 lineup but delay preorders and retail availability
by several weeks, similar to its 2017 iPhone X launch strategy.
AMAT Applied Materials came into
Thursday's fiscal third-quarter report about 28% beneath its 52-week high of
$739.67, closing the session at $534.54. The chip-equipment maker then posted
records on nearly every line. Revenue came in at $9.1 billion, up 25% year over
year. Non-GAAP (adjusted) earnings per share rose 41% to a record $3.50.
Operating income and operating cash flow set records, too, with the latter
topping $3 billion. Management then guided fiscal fourth-quarter revenue to
$10.25 billion, plus or minus $500 million, good for 51% year-over-year growth
at the midpoint. The stock fell about 5% in after-hours trading anyway. A
company reporting records while its shares sit more than a quarter below their
high makes for a disagreement worth taking seriously. What is the market
discounting that the income statement isn't showing? Not only is the growth
strong, but it's also speeding up. Revenue rose 15% sequentially -- growth that
CEO Gary Dickerson called "the highest quarter-on-quarter revenue growth
in the company's history" on the earnings call -- on top of the 25%
year-over-year gain. Non-GAAP gross margin reached 50.4%, the 13th consecutive
quarter of year-over-year expansion, and non-GAAP operating margin hit a record
34%. DRAM revenue, which includes high-bandwidth memory (HBM) packaging, grew
52% year over year to record levels. And the fiscal fourth-quarter guide points
the same direction: 25% year-over-year growth in fiscal Q3 becomes 51% at the
fiscal Q4 midpoint, with non-GAAP earnings per share guided to $4.02, up 85% --
a comparison helped by a soft year-ago quarter, when revenue had dipped.
BA In 2005, Boeing sold its
commercial airplane operations in Kansas and Oklahoma to the investment firm
Onex for about $900 million in cash. The business became Spirit AeroSystems,
the world's largest independent supplier of aircraft structures -- including
the fuselage of the 737. In December, Boeing paid $4.7 billion in stock to take
it back. Counting Spirit's debt, the deal was valued at about $8.3 billion. That
history is worth holding onto, because Boeing is selling again. On Aug. 10, the
aerospace giant agreed to sell three of its future-flight businesses (Wisk
Aero, Insitu, and SkyGrid) to Archer Aviation. The Wichita plant Boeing sold
kept building 737 fuselages, now as a supplier, shipping them by rail to
Boeing's factory in Renton, Washington. For years, that looked like ordinary
industry practice: aerostructures were something an airplane maker could buy
rather than own. But Spirit's problems became Boeing's problems, because the
fuselages were Boeing's product no matter whose name was on the plant. Boeing
framed the repurchase as a commitment to aviation safety and a way to improve
quality in its commercial airplane business. The company agreed in July 2024 to
bring Spirit back inside, and the deal closed on Dec. 8, 2025. "This is a
pivotal moment in Boeing's history and future success," CEO Kelly Ortberg
said in the company's press release on the closing. The purpose was control.
And a business sold for about $900 million came back at $4.7 billion, plus
assumed debt, two decades later -- after the quality problems had already done
their damage. Archer is acquiring Wisk Aero, Boeing's autonomous air-taxi unit
with more than 1,700 test flights behind it, along with Insitu, a maker of
unmanned aircraft with operations in 35 countries, and SkyGrid, an
air-traffic-management software company. Archer has pitched the combination as
bringing artificial intelligence (AI) into aerospace and defense hardware. Of
course, Boeing isn't simply exiting. It is taking a stake in Archer, and the
two companies agreed to a technology-sharing arrangement that preserves
Boeing's access to Wisk's autonomous-flight technology for future commercial
and defense aircraft. The deal is expected to close by the end of 2026, pending
antitrust review. In 2005, Boeing sold a piece of its own product and kept a
supply contract. This time it is selling businesses that don't build any part
of a Boeing airplane, and keeping both an ownership interest and rights to the
technology it might need later. The sale fits a pattern. Late last year, the
company also closed the sale of its Jeppesen and ForeFlight software businesses
to Thoma Bravo, an all-cash deal valued at $10.55 billion. Boeing is sorting
what it must own from what it only needs access to. The selling has a clear
reason: the core business finally has momentum worth funding, and it still
carries the debt of the bad years. The quarter backs that up. Revenue rose 8%
year over year to $24.6 billion in the second quarter, on 171 commercial
deliveries, up 14% from 150 a year earlier. The same goes for cash. Free cash
flow came in at $631 million, compared with an outflow of $200 million in the
year-ago quarter, and the first half's $823 million outflow was a big
improvement from the $2.5 billion that went out in the first half of 2025. To
be fair, the company is still losing money. On a core, non-GAAP (adjusted)
basis, the loss came to $0.76 per share, narrowed from $1.24 a year earlier. And
the backlog says demand isn't the constraint. Boeing ended the quarter with a
record $715 billion backlog, including more than 6,200 commercial airplanes.
Building them fast enough is the constraint, with $45.9 billion of consolidated
debt sitting against $20 billion of cash and investments. Air taxis and drones,
however promising, compete for capital with that job. So, is Boeing repeating
its 2005 mistake? I don't think so. The Spirit lesson was about control of
Boeing's own product, and nothing in the Archer package touches a Boeing
airplane today. The longer-term risk is different. If autonomous flight becomes
central to aerospace someday, a stake and shared rights to technology are not
the same as owning the business. Sure, that could make this deal look bad in a
decade. But Boeing already paid $4.7 billion to learn what it has to keep
inside. At about $211 as of this writing, roughly 17% below its 52-week high,
the stock's valuation is arguably a bet on the recovery of the core business.
Selling what sits outside that core is consistent with the bet.
BWXT BWX, which was spun off from Babcock
& Wilcox in 2015, is the only large-scale producer of specialized nuclear
components, fuel systems, and naval reactor systems in North America. It's one
of the few companies licensed to work with regulated nuclear materials, handle
high-assay enriched uranium (HALEU) and tri-structural isotropic (TRISO) fuel,
run large precision nuclear fabrication facilities, and develop naval reactor
components for the U.S. Navy. That scale and diversification make BWX a
bellwether of the nuclear market. It's also a linchpin of the industry, since
it dominates irreplaceable parts of North America's nuclear supply chain. BWX
generates most of its revenue from the defense sector, so it was better
insulated from the post-Fukushima slowdown in commercial nuclear spending. From
2021 to 2025, BWX's revenue and adjusted earnings before interest, taxes,
depreciation, and amortization (EBITDA) grew at CAGRs of 11% and 8%,
respectively. That growth was supported by new Navy orders, a recovering commercial
sector, its growing uranium-processing business, and two major acquisitions in
2025. It also started providing engineering support services for developers of
small modular reactors (SMRs). At the end of 2025, BWX's backlog grew 50% year
over year to $7.3 billion, driven by orders for its naval propulsion
components, commercial nuclear power components, and special materials. From
2025 to 2028, analysts expect BWX's revenue and adjusted EBITDA to grow at
CAGRs of 12% and 11%, respectively. With an enterprise value of $17.4 billion,
it still looks reasonably valued at 27 times this year's adjusted EBITDA. So,
if you're looking for a simple way to profit from the nuclear market's growth,
BWX checks all the right boxes.
CAT You likely know Caterpillar best
as a maker of bulldozers and other heavy construction equipment, but you may
also be aware that its conventional, diesel-powered generators are also now in
use as a source of primary or secondary power for a few AI data centers.
Perhaps most notably, Microsoft's planned Monarch Compute Campus in West
Virginia will initially depend on Caterpillar's G3500-series of natural gas
generators for electricity. This is mostly just a stop-gap though. This
facility will ultimately be powered by two gigawatts' worth of Caterpillar-made
-- through its wholly owned subsidiary Solar Turbines -- natural gas turbines,
underscoring that the company is capable of competing outside of the
construction arena. To this end, a large share of last year's 24%
year-over-year sales growth was driven by data center demand.
CNI No news.
COST Costco Wholesale has spent decades
outpacing the market. Even after its big run in 2023 and 2024, I think it is
still on track to beat the S&P 500 over the next year and remains a solid
buy for patient investors. The ticker has outperformed the S&P 500 in 16
out of the 25 years between 2000 and 2025, giving it a historical win rate of
64% over that 25-year span. Over longer stretches, the record speaks for
itself. Over the past five years, Costco has delivered a total return of about
124% versus roughly 75% for the S&P 500. Over three years, it has beaten
the index again with a 76% gain, versus about 75% for the benchmark. The stock
has climbed more than 28,000% in real terms since the mid-1980s. That kind of
compounding is hard to find in consumer goods. Even after a modest pullback
from its May all-time high near $1,094, Costco still sits near $950 and has
held most of its recent gains while the broader market has seen more
volatility. There is a reason for all this success. Costco's engine is not a
fad. It is a membership model that generates a steady stream of high-margin fee
income alongside fast-moving sales. Renewal rates in the United States and
Canada are above 92%, and global renewal is near 90%, meaning almost nine out
of 10 members pay to come back year after year. That is a very sticky base. On
top of that, the company continues to deliver strong operating results. July
2026 net sales reached $23.12 billion, up 10.7% from a year earlier, with total
company comparable sales up 8.9% and digitally enabled comparable sales up
17.7%. What makes Costco interesting from here is that it still has room to
grow without changing the formula. It continues to open new warehouses in
underpenetrated markets, expand its e-commerce and delivery offerings, and add
services such as travel, optical, and pharmacy to deepen member engagement. The
balance sheet is clean, with modest debt relative to cash flow. Management has
also shown that it will share excess capital through occasional special
dividends and steady regular dividend growth. The stock is not cheap. At around
$950 per share, Costco trades at more than 30 times forward earnings, a premium
to many retailers and the market itself. The reason investors still pay that
price is that the earnings stream has proven durable across cycles. During years
when the S&P 500 struggled, Costco often kept delivering mid-single-digit
comp sales and solid profit growth. When the index surged in 2023 and 2024,
Costco managed to beat it yet again. A couple of things to note: Even though
Costco is a strong, reliable business, its heavy reliance on membership fees
means slower membership growth or lower renewal rates could hurt profits. Its
international expansion, especially in markets like China, offers growth but
also brings competition and execution risks. My biggest concern is Costco's
high stock valuation, as discussed above, which leaves little room for mistakes
or slower growth and could lead to a sharp drop in the stock price. For next
year, my prediction is that the same forces will continue to work and that
Costco will outperform the S&P 500. Part of my logic against the index is
that its value has increased so quickly over the last two to three years, and
it is bound to correct a bit here soon. As long as Costco's renewal rates stay
high, new warehouses continue to ramp up, and digital channels add incremental
volume, it has a good chance of once more finishing ahead of the index. It will
not be the fastest mover in your portfolio, but if you want a consumer-facing
stock with a long record of beating the S&P 500 and a business model with
runway, Costco remains a strong buy.
EME No news.
GOOGL Alphabet has become one of the most
popular artificial intelligence (AI) investments among
major hedge funds. It was one of the last stocks that legendary CEO Warren
Buffett bought at Berkshire Hathaway, and the firm is still purchasing more
shares of it even after he retired from that role. David Tepper, who runs
Appaloosa Management, also loaded up on Alphabet shares during the last
quarter, and the position now makes up nearly 9% of his firm's portfolio. Those
are some major players confidently investing in Alphabet, despite its strong
performance over the past year (it's up over 65%). I think there's a good
chance that it can go higher from here, as it's one of the top big tech stocks
available on the market. Alphabet is benefiting from AI in a handful of ways.
First, it has successfully implemented AI into some of its legacy products,
including Google Search and YouTube. Just over a year ago, both of these
segments were potential victims of AI. With Alphabet embracing and
incorporating AI feature sets, they have evolved to become even more dominant.
During Q2, Google Search's revenue rose 17% year over year, while YouTube ads
increased by 13%. Those are solid growth figures for legacy business units, and
showcase that Alphabet can successfully integrate AI into most of its products.
The biggest area where AI is boosting Alphabet's financials is its Google Cloud
division. Alphabet's cloud computing wing is seeing major growth, but at a huge
cost. When you hear about Alphabet having capital expenditures bills of $200
billion or greater in 2026, this is where the majority of the money is being
spent. However, investors are seeing early signs of this paying off. In Q2,
Google Cloud's revenue increased by 82% year over year. That's an incredible
growth rate, and helped boost Alphabet's overall growth rate to 24%. Alphabet
is growing at its fastest pace in years, and with Google Cloud slated to
continue growing at a rapid pace over the next few years, right now could be
the start of a major expansion in Alphabet's business. While I usually would
use net income to value a stock like Alphabet's, its current price-to-earnings
(P/E) ratio is skewed by a handful of one-time gains on investments. From this
perspective, Alphabet is trading around its average valuation over the past 15
years. I think Alphabet is a great stock to buy at these levels; an investor
should consider following the smart money like Berkshire Hathaway and David
Tepper and scoop up shares.
LIN No news.
MP Last month, MP Materials
signed an agreement to supply gadolinium oxide (a key rare-earth material found
in nuclear reactor shielding on submarines and infrared sensors and
electronics) to an unnamed U.S. aerospace and defense manufacturer. Management
expects the contract to be worth nine figures over multiple years, with MP
developing the additional separation capacity at its Mountain Pass facility in
California. Now, the company hasn't disclosed the customer or the specific size
of the contract, but management described the deal as significant. And while
I'm not typically keen on ambiguity, the announcement of this deal does provide
some interesting intel about demand. You see, American aerospace and defense
companies rely heavily on rare-earth materials for everything from aircraft and
missiles to radar systems, satellites, and drones. The problem is that China
controls much of the world's rare-earth processing and manufacturing capacity.
That's a vulnerability the U.S. government has been trying to eliminate. MP
Materials already operates a mine and processing facility in Mountain Pass,
California, and it's expanding further in Texas, where it currently produces
rare-earth metals and magnets in Fort Worth. The company is actually building a
much larger magnet manufacturing campus in nearby Northlake. In Q2, MP
Materials produced 840 metric tons of NdPr oxide, up 41% year over year. NdPr
is neodymium-praseodymium, the material used to make the essential permanent
magnets found in electric vehicles, drones, robotics, and wind turbines. MP
sold 1,006 metric tons of NdPr in the second quarter, a 127% increase from the
same quarter last year. That helped push quarterly revenue up 89% to $108.5
million, while adjusted earnings before interest, taxes, depreciation, and
amortization (EBITDA) improved by $41 million to $28.5 million. Those numbers
are important because MP's investment thesis increasingly depends on its
ability to move beyond simply mining rare-earth ore and sell higher-value
products further down the supply chain. And that's exactly what's starting to
happen. MP's magnetics segment generated $16.5 million in Q2 revenue, and adjusted
EBITDA from that business reached $7.5 million. The unnamed aerospace company
isn't the first major customer to back MP's domestic supply chain strategy.
Last year, the Department of Defense agreed to invest $400 million in MP
Materials. Then Apple followed with a $500 million commitment to purchase
American-made rare-earth magnets from MP. So now you've got the Pentagon,
Apple, and an aerospace and defense company all moving in essentially the same
direction. MP has spent years building the infrastructure necessary to create a
rare-earth supply chain outside China. Now the customers are beginning to line
up before that build-out is even finished. Apple wants magnets for consumer
electronics. The Defense Department wants a secure domestic supply chain. And
now an aerospace and defense customer has signed a long-term agreement for
another critical rare-earth material. That's why I don't believe this latest
aerospace agreement will be the last. The bottom line is that the more
companies decide that dependence on China represents an unacceptable supply
chain risk, the more valuable MP Materials' domestic production becomes.
MSFT Microsoft has just reported what
was possibly one of the best years in its history. In fiscal 2026 (the year
ended June 30), revenue rose 18% to $331.8 billion, and net income grew 31% to
$133.7 billion. The stock, however, did not follow the same path. Microsoft's
market cap, at about $3.59 trillion as of this writing, sits about 4.5% below
where it was a year ago. How did this happen? The market put a different price
on earnings. A year ago, investors paid about 37 times earnings for Microsoft.
Today they pay about 27 times earnings. Put another way, the business grew
nearly a third, yet the price of each dollar of its earnings fell more or less
by the same proportion. Whatever the answer, it is not headline results.
Revenue growth held at 18% for the full year and again at 18% in the fourth
quarter. Azure revenue topped $100 billion for the fiscal year, up 41%, and
fourth-quarter revenue from Azure and other cloud services grew 43%. Commercial
remaining performance obligation (contracted work not yet recognized as
revenue) hit $678 billion, up 84% year over year. Operating income rose 21% to
$155.2 billion, faster than revenue. To be fair, gains from Microsoft's
investments in OpenAI added about $5 billion to fiscal 2026 net income, which
boosts that 31% figure. Excluding the impact of OpenAI, earnings per share
still rose 22% -- although even that figure includes a $3.2 billion gain in the
fourth quarter from Microsoft's stake in Anthropic. Still, a business of this
size growing at those rates year Software stocks have fallen broadly this year
on fears of disruption from generative artificial intelligence (AI) models --
and Microsoft has been caught in that decline. But I think the bigger and more
specific concern lies in the company's cash flow position. Microsoft spent
$115.9 billion on property and equipment in fiscal 2026, up 80% from the $64.6
billion the prior year. In the fourth quarter alone, capital expenditures and
finance leases hit $41 billion, up 69% year over year. For calendar 2026, chief
financial officer Amy Hood has given guidance of about $175 billion in capital
expenditures and finance leases, and expects more growth in fiscal 2027,
pointing to "demand signals across our portfolio." Contrast that with
what the company earns. In fiscal 2026, the company generated $155.2 billion in
operating income. In other words, planned capital expenditures for the year are
greater than everything the entire business earned from operations last year. Sure,
operating cash flow rose 34% year over year to $182.9 billion in fiscal 2026
(the business generates money in droves). But after capital expenditures, free
cash flow came in at about $67 billion -- below about $72 billion from the
prior year. So, earnings rose 31%. But the leftover cash flow after capital
expenditures shrank. Further, almost every dollar Microsoft spends on data
centers returns over time as depreciation that reduces future earnings, and the
payoff is uncertain, depending on AI computing demand staying strong enough in
a few years to fill the capacity being built today. The contrast with shows how
the market is voting. Apple spent $6.8 billion on capital expenditures in the
first nine months of its fiscal year (less than what Microsoft spent just in
its June quarter), and its market cap rose about a third over the past year, to
$4.51 trillion. Apple now trades at about 35 times earnings, versus 27 for
Microsoft. Right now, investors pay a premium for the company that touches the
customer and spends the minimum, and a discount for the one that builds the
computing layer underneath. Then there's, of course, the discount the market
seems to be assigning many software-centric stocks since it's uncertain how
well software will hold up in an AI era. This risk may be the biggest reason
Microsoft's stock hasn't kept up with its underlying business performance. The
$678 billion backlog is demand customers have already
contracted for (although Microsoft said in January that about 45% of that
figure at the time came from OpenAI alone). And if Azure continues growing at a
pace near 40% while spending stabilizes, today's 27 times earnings could look
conservative. Overall, the market seems to be approaching Microsoft stock
skeptically but possibly fairly as well. In other words, I think shares are
more of a hold than a buy here.
NU Nu
Holdings has been an incredible long-term success story. Founded in 2013, the
online-only bank now has nearly 140 million customers across just three
countries: Brazil, Colombia, and Mexico. Year-over-year revenue growth has
consistently been in the double digits, sometimes exceeding 100%. Some analysts
worry that the fintech's biggest days of growth are behind it. After all, the
competition is catching on to Nu's asset-light business model. But a few key
figures from the company's recent quarterly earnings announcement suggest that
the fintech stock remains a long-term buy. As I detailed earlier this month, Nu
is facing increased competition, but its competitive advantages continue to
give it a durable edge. In recent years, competing banks have acquired more
customers, but at the expense of declining credit quality and rising deposit
costs. Meanwhile, Nu has been able to maintain high revenue and customer growth
without sacrificing borrower quality or net interest margins. This quarter, the
company posted a consolidated cost of deposits of 88% the interbank rate, three
percentage points lower than a year ago. Its efficiency ratio (a measure of how
well the bank is managing operating costs) and asset quality metrics also
improved. In total, investors are seeing no indication that Nu's competitive
advantages are waning. In fact, investors should come away with greater
confidence in the durability of Nu's business model, as many of its key metrics
continued to improve despite intensifying competitive headwinds.
SPGI S&P Global stock is doing
something it rarely does -- it's having a bad year. Since it spun off from
McGraw Hill in 2016, it has had only one negative year, 2022, when the stock
fell 29%. Over the past 10 years since the spinoff, it has beaten the benchmark
that it owns with an average annualized return of 13.8%, compared to 13.6% for
the S&P 500. But it is heading for its second negative year this year, as
the stock price is down about 16% as of Aug. 5. A good chunk of that decline
has come in the past month, as shares have dropped about 6%. Among the concerns
leading up to S&P Global's second-quarter earnings release on July 28 was
how the sputtering economy would impact the company, particularly from an
interest rate perspective. The July 28-29 meeting of the Federal Open Market
Committee (FOMC) supported those concerns. The FOMC kept rates in check at the
latest meeting, but there was growing momentum for a rate hike this year, given
persistently high inflation rates. Three FOMC members of the 12 dissented on
the vote to hold rates at the current range, with all favoring a rate hike. This
is not a good omen for S&P Global's ratings business, as higher rates tend
to reduce the amount of corporate borrowing and refinancing, which in turn
leads to less debt issuance. That can result in a lower amount of new debt for
S&P Global to rate, and that can hurt its revenue. But S&P Global also
released earnings on July 28, and the results were solid. Revenue increased 10%
year over year, but on an adjusted basis, excluding the Mobility business,
which S&P spun off as its own company on July 1, it rose 11%. Earnings
climbed 18% to $4.12 per share, but excluding the spun-off business, they
jumped 23% to $4.83 per share. S&P Global beat revenue and earnings
estimates, and two of its business lines, ratings and indexes, had record
revenue in the quarter. The results generally supported the idea behind the
spinoff, to focus resources and drive revenue in its four main businesses --
ratings, indexes, market intelligence, and energy consulting. The strategy
behind spinning off Mobility is in large part to reinforce the moats that
S&P Global has built in ratings, indexes, and even market intelligence. The
enduring strength of S&P Global is that these businesses are all market
leaders, with major competitive advantages. But they are also diverse
businesses that balance each other out, with some performing better when others
may be down. The latest dip is a great opportunity to buy a great company with
multiple moats at a discount. Because it has been such a strong performer, it
has always traded at a premium, but the current price-to-earnings ratio of 25
is as low as it's been since 2022, and well below its average P/E ratio of 32. At
that value, SPGI's reinforced moats are worth it.
TSM While Nvidia may be the face of
the AI build-out, it's only a chip designer; it doesn't fabricate its chips.
That work is farmed out to other companies, with Taiwan Semiconductor being
arguably the most important. It is a chip foundry that takes other companies'
designs and fabricates them for them. Taiwan Semiconductor is the top logic
chip fabricator in the world, and often produces chips for competing companies,
such as being a top supplier for both Nvidia and AMD. This places the company
in a great spot to benefit from the AI build-out, regardless of whose computing
units are currently the most popular. As long as there is more money being
spent on the AI build-out, Taiwan Semiconductor's stock is tempting. With
Nvidia's projections that AI data center spending will continue to rise over
the next few years, I think it's a great stock to buy now.
V Visa, a leading financial
services company, needs no introduction. The company is one of the leaders in
providing a secure infrastructure that allows companies to process credit card
transactions rapidly and safely. Visa charges a fee for every transaction it
processes. Since fees are calculated as a percentage of the transaction amount,
higher inflation-driven prices mean higher revenue per transaction, all else
being equal. That doesn't mean inflation can't harm the business in any way. It
may reduce the total number of transactions Visa processes, and various
government initiatives to combat inflation could also impact the company's
operations. However, these factors affect every company, and given inflation's
impact on Visa's per-transaction revenue, it could still outperform most
others. That said, Visa has not performed well this year as the company deals
with legal and regulatory issues, including an antitrust lawsuit. Recent
financial performance is helping it rebound, though. In the third quarter of
its fiscal year 2026, ended June 30, Visa's revenue increased by 14% year over
year to $11.6 billion, while its adjusted earnings per share were up 11% year
over year to $3.32. I expect Visa to deliver strong returns well over the long
run, given its wide moat from network effects and the vast runway for growth
remaining in the industry. What about the company's legal issues? Similar
problems have rarely dealt a death blow to major corporations like Visa. At any
rate, given how slow the legal process is, the company can absorb the costs of
these lawsuits over long periods since it generates significant earnings and
cash flow. The bottom line: Visa is a great stock pick in the current
environment, and investors who hold onto the company's shares for a while could
be rewarded.
WM The phrase "cash is
king" translates easily to "trash is king," particularly for
Waste Management, now known as just WM. The industrial company is involved in
every aspect of waste management, collecting trash and recyclables,
transporting them to its landfills and recycling stations, and converting
landfill gas into renewable electricity and renewable natural gas (RNG). Its
shares have risen less than 2% so far this year, but there are plenty of
reasons to invest in the Houston-based company, particularly with the stock
trading at less than 28 times forward price to earnings, well below its
traditional forward price-to-earnings (P/E) ratio. Here are three reasons to
load up on WM stock: It owns 253 solid landfills, four hazardous waste
landfills, and 113 recycling facilities, more than any other waste company in
the U.S., and has a 34% market share. The company's $7.2 billion purchase of
Stericycle in 2024 has given the company an additional high-margin growth area:
medical waste. It has 17 medical waste incinerators. It enjoys utility-like
pricing power. Trash collection and disposal are non-discretionary utility-like
services. Because waste removal accounts for a negligible share of total
operating expenses for commercial clients and municipalities, WM has strong
pricing power. The company routinely passes through core price increases that
offset inflationary pressures without triggering meaningful customer churn,
generating stable, predictable operating cash flow across all economic cycles. In
the second quarter, the company reported revenue of $6.68 billion, up 4% year
over year, and earnings per share (EPS) of $1.95, up 8% over the same period a
year ago. WM is forecasting full-year adjusted operating earnings before
interest, taxes, depreciation, and amortization (EBITDA) between $8.15 billion
and $8.25 billion, up 8.5% at the midpoint. It's also estimating for free cash
flow between $3.75 billion and $3.85 billion, up 6.4% at the midpoint. Revenue
is estimated to be between $26.275 billion and $26.475 billion, up 4.6% at the
midpoint. Sustainable dividend growth and good capital allocation. WM has
demonstrated a 23-year track record of annual dividend increases, supported by
a conservative payout ratio of 49.26%. Over the past 10 years, it has increased
its dividend by more than 130%. It raised its dividend by 14.5% this year to
$0.945 per quarter. In the second quarter, it also had $659 in share
repurchases. The cash-generative nature of the core collection-and-disposal
business allows management to simultaneously fund strategic growth initiatives,
such as investments in renewable natural gas (RNG) infrastructure and automated
recycling facilities, while maintaining consistent share repurchases and
growing dividend returns.
Stock Picks:
CX: Buy Broadcom (AVGO) a global technology company,
which designs, develops, and supplies semiconductors and infrastructure
software solutions. It operates through the Semiconductor Solutions and
Infrastructure Software segments. The Semiconductor Solutions segment refers to
product lines and intellectual property licensing. The Infrastructure Software
segment relates to mainframe, distributed and cyber security solutions, and fibre channel storage area networking business.
KS: Buy additional MP Materials (MP).
JL: Buy Space Exploration Technologies Corp. (SPCX).
The company does business as SpaceX, operates as an aerospace manufacturer,
launch service provider, and satellite communications company. It is building
the integrated hardware and software infrastructure of the future across space,
connectivity, and AI. The firm designs, manufactures, launches, and operates
products and services built on cutting-edge technologies, including the rockets
and spacecraft.
Sell Kodiak Copper Corp. (KDKCF) due to poor
performance.
HT: Buy additional MP Materials
On Monday, August 10, 2026, the following order(s)
filled:
Sell 42 MBGL @ $19.19/share, minus SEC fee of $0.02;
net $805.96
Buy 73 MP @ $54.42/share; total $3972.66
On
Tuesday, August 11, 2026, the following order(s) filled:
Sell
3700 KDKCF @ $0.52305/share, minus SEC fee of $0.04; net $1935.25
Meeting
adjourned at 2:18 PM.
Respectfully
submitted by Ken Bauman.
Next Meeting: Thursday,
September 3, 2026 at 1:30 p.m. at:
3054 Sunrise Blvd Suite J
Rancho Cordova, CA 95742
(916) 706-0343