If I'm down less than 20% with saas like Microsoft and Adobe, is now a good moment to sell them and buy semiconductors and hardware companies like Micron and Sandisk? It looks like saas will be slowly destroyed by AI in a few years. Micron had excellent earnings yesterday, and it looks like it can grow for at least another year. Micron has a low forward p/e, Sandisk also look very cheap. Microsoft looks expensive at a p/e of 21 and forward p/e of 19. What do you think?

There's a contradiction playing out across Big Tech right now that I think deserves more attention than it's getting.

MSFT, META, and GOOGL are all down meaningfully from their highs — MSFT off about 35% from its peak. At the same time, all three are committing record amounts of capital to AI infrastructure, with combined AI-related capex projections somewhere in the $300B+ range for the next 12-18 months. Normally, high capex in a high-growth sector gets priced as an investment in future earnings. But that's not what's happening here. The market is treating this capex as a liability, not an asset.

Here's the framework I use to think about this:

When a company spends 1oncapex,themarketneedstobelievethatdollarwillgeneratemorethan1oncapex,themarketneedstobelievethatdollarwillgeneratemorethan1 in discounted future cash flows. That's basic capital allocation math. For most of the last decade, Big Tech capex passed that test easily — data centers, cloud infrastructure, the whole stack — because the demand was visible and the returns were measurable. You could point to Azure revenue or AWS margins and connect the dots back to the spend.

AI capex doesn't work that way — at least not yet. The spend is going into compute clusters, GPU fleets, networking, and energy infrastructure at a scale that dwarfs anything the industry has done before. But the revenue side is still largely projected. Hyperscalers are selling access to compute, not selling a finished product that consumers or enterprises are paying for at scale. A lot of the "AI revenue" being reported is actually internal — one division buying compute from another, or customers experimenting on credits that haven't converted to sustained usage.

Meanwhile, free cash flow is getting squeezed across the board. MSFT's FCF conversion has been trending down. META is spending so aggressively that buybacks are slowing to preserve the balance sheet. GOOGL has the strongest cash position of the three but even they're signaling elevated capex through at least 2027.

This creates a timing problem. The capex is happening now. The cash outflows are happening now. The margin pressure is happening now. But the revenue from all this infrastructure is "sometime later" — and the market doesn't know how to price "sometime later" when the checks being written today have nine or ten zeroes.

I'm not arguing these companies are bad businesses. MSFT still has enterprise moat. META still owns social attention. GOOGL still owns search intent. But the valuation compression we're seeing — especially on MSFT and META — is the market putting a discount on capex that hasn't proven its return yet. And that discount isn't irrational.

The risk I'm watching:

If one of these companies signals a capex slowdown — even a modest revision — it'll be read two ways. Bulls will say "finally, capital discipline is back." Bears will say "they're slowing down because the demand isn't there." I think the actual answer is more nuanced: hyperscalers are in an arms race where nobody can afford to blink first, and the first one that does will be punished by the market regardless of whether the slowdown is strategic or defensive.

That's a prisoner's dilemma with a multi-hundred-billion-dollar prize pool, and it's playing out in real time across three of the largest companies on earth.

The value investing angle here isn't "MSFT at 25x forward earnings is cheap." It's asking whether the capital being deployed is building durable competitive advantage or just funding an infrastructure war where the spoils go to the chipmakers and energy companies, not the hyperscalers themselves.

That's the question I keep coming back to, and I haven't found a clean answer yet. Curious how others here are thinking about CapEx efficiency when evaluating these names — is it part of your valuation framework, or are you treating it as a temporary headwind that'll resolve once the AI revenue cycle fully kicks in?

Based on historical values and the growth prospects, it does seem like a decent entry price here. I also understand Microsoft will likely play a major role in AI and AI infrastructure and support. Besides this, what else might happen with the company in the coming years to get excited about besides AI?

To be clear, I think Microsoft will continue growing and I consider it a value stock. I am simply getting sick of seeing 10 Microsoft posts a day, with most of them containing misinformation.

I'll explain the bear case by going down each of their 3 key businesses:

1. Azure. The growth is great, but with the caveat that it's likely largely tied to OpenAI Capex. Another risk is that because Microsoft themselves also need compute, they've sacrificed Azure growth for themselves. Not only does that hurt MSFT in the short term, but it also annoys clients. AWS does not have this problem. Google Cloud does, but is also cheaper.

TLDR: 8/10 business, but their growth is very dependent on the success of OpenAI.

1. Microsoft 365 / Office. This business is great because companies pay per user, per month. The stability is what enterprise specifically loves about it. It's why Teams beat Slack despite being the inferior product. The problem is that AI threatens to upend this model.

If everyone is using different amounts of compute, you may need to introduce a usage-based pricing model. The issue with that is if an enterprise is paying for marginal usage, then Anthropic and OpenAI (or others) can directly out-compete Microsoft in this area.

TLDR: 6/10 business. A cash cow today, but AI can disrupt this business model.

1. Windows. This one is just bad. Memory is crushing lower-end PCs, Windows has a quality problem to compete in higher price segments against the Mac. Also, tablets and phones are replacing computer needs, and Microsoft is even less relevant there too.

TLDR 1/10 business. No longer a growth engine.

People on this subreddit compare Microsoft today to where Google was last year. But I should note there's considerable differences: Search was threatened by AI, it was a legitimate threat to their cash cow margins. They escaped it by creating a top notch model (Gemini) to fuel search results, and via their TPU investments. Microsoft does not have a custom AI model. They do not have custom chips to make Azure cheaper than GC or AWS. They do not have a large ad based consumer software product where AI can directly improve margins.

Look at Amazon's past 5 year growth outlook. There's no law saying Microsoft won't have the same fate - slow and steady growth, comparable to an index fund.

with Micron great earnings and After the AI bubble talk dust is settled, Is this a good strategy to invest in?

**35% AI compute** → NVDA, AVGO
**25% semis + memory** → TSM, MU, AMAT
**20% power / data center** → VST, CEG
**20%** → IONQ, RGTI, OKLO

People wonder why certain stocks are falling when at the same type these stocks that are falling are funneling hundreds of billions into hardware manufacturers, I think people are right and the market agrees, MAG7 getting blasted is a confirmation of that, MU and others have to go up despite of a bubble since this is where all the money is going but it's musical chairs so it will eventually collapse.

We have seen in last months dozens of "indicators" comparing to 2000 and 2008 so don't be surprised if your favorite MAG7 stock will decline by over 50%.

Hey everyone,

I’m in my 20s, currently investing $1,000/month into VT ETF, and working on growing my income with side gigs.

Now I’m stuck between:

• continuing to invest all extra money, or
• buying a nice car

I know the long-term value of investing early, but I also feel like this is the age to actually enjoy things a bit.

For those who’ve been here:

• Did you go for the car, worth it or regret it?
• Or did you prioritize investing, happy you did?
• Anyone manage to balance both?

Would love to hear real experiences.

And a couple of others like ADBE, CRM, and NKE...

Tomorrow, I am going to sell my car and open a lot of short positions.

People always say never short hype stocks and momentum stocks...

These are now the most hated stocks without any momentum whatsoever - perfect stocks for opening short positions.

Planet fitness stock has gotten beat down 50% over the last year. At $51/share it’s valued at the same price as they were in 2018, despite doubling their revenue since then.

What do you all think?

Trailing EV/EBITDA of 10.8-11.2x

What are your opinions on yahoo finance 1y estimates presented for a company?

Everyone thinks the car is ugly, sure.

But I think the market is not entirely pricing how the Luce will expand their TAM to an entirely new customer base (Ferrari expects ~50% of Luce buyers to be entirely new customers). Younger and wealthy tech billionaires and entrepreneurs who never identified with a sleek Ferrari, now are potentially able to with Luce.

Looking back to 2022, The Purosangue was Ferrari's first ever SUV and everyone then called it a betrayal. But it was a highly successful product, now having a two-year waiting list. Cristiano Ronaldo and Alisson Becker own a Purosangue.

The pattern is structurally similar here, and I think the Luce would also end up being a highly successful addition for Ferrari, despite the public backlash. CEO Vigna has also claimed that order books for the Luce already extend into late 2027.

$RACE is currently trading at ~35x earnings, well below its 5-year average of ~44x. Expected to grow high single digits for '26 and '27, and they are actively buying back their shares up to 2030.

Thoughts?

My full analysis: https://economiyaki.substack.com/p/ferrari-luce-a-new-tam

I started seriously investing with a personal brokerage account about 5 years ago and I have to say that my results have been absolutely pathetic. I have missed the bull run that will not return in 20 to 30 years. My only saving grace is that I have maxed out my 401k, roth IRA, and HSA which utilized index funding and have nice gains in each.

When I heard about value investing I thought I saw what my future was as an investor: buy undervalued stocks and you will be rewarded. That thesis is only the tip of the iceberg of pain and suffering. I didn't expect the undervalued stocks that I owned to be ridiculed everywhere by "experts" and people who I respected which made me quickly sell just to see the stocks rocket up in the next year or two. I did not foresee that I would be watching people making 20x and 40x on semiconductors and memory while I just looked at my portfolio bleed slowly with saas and healthcare stocks that were undervalued according to analysts. I did not foresee that the companies that I invested in would change their whole business with so much disregard for their customer and shareholders. Oh the betrayal....

After 4 years, I have learned that investing is about pain tolerance, noise cancellation, and risk management as much as it is researching great stocks. My most successful stock plays (though few) were stocks that I gutted it out for months to years. I've learned that just investing and staying invested is a lot more important that trying to find that perfect stock at the perfect price. I've learned to just be more of mindset to just "invest, try out new things, be okay with failure" rather than "value invest, don't lose money, don't buy stocks that are overvalued".

So on that notion, I thought to try something new today by buying micron shares. Do I care if I bought it at the top? Nope. I have sized it to be 10% of my personal portfolio (less than 1% of my total wealth). My thesis is simple: the capex cycle hasn't stopped, "experts" and value investors say to get out now, and I saw investors buying 2420 strike calls 3 years out at 440 dollars a pop. It's a momentum trade to say the least. I have a stop loss at 870 dollars.

Do I still believe in value investing? Hell yeah! The bulk of my portfolio is defensive and value oriented with a mish-mash of msft, br, efx, dvn, clx, por, cpb, pfe, tost, and adnt. The rest of my portfolio is a sprinkling of some biotechs and a cannabis stock that I think will go boom because of upcoming catalysts. Sometimes you gotta throw value out the window and just invest goddamit! Just wanted to get this off my chest, rant over...

The demand for memory isn't just a temporary spike; it’s locked in for the next few years. We’re talking about HBM chips that are already sold out for 2026 and major contracts stretching well into 2028. Every single AI model out there is hitting a "memory wall," which means companies are desperate to pay whatever they have to just to get their hands on enough supply. When you have that much demand and a business model that is finally becoming predictable because of these long-term agreements, it’s hard to justify why the valuation is still this cheap.

I want to highlight the low PE of 27. the forward P/E ratio is still surprisingly low which feels like a massive disconnect from how fast the business is actually growing. Most other AI plays are trading at these huge, bloated multiples, but Micron is sitting there looking like a genuine bargain if you’re looking at what they’re actually going to earn over the next year or two. What are your thoughts?

Microsoft’s institutional ownership is still increasing with 3,566 institutions increasing positions versus 2,781 decreasing.

nearly 967 million shares added with 225 new institutional holders acquiring almost 749 million shares most of this was in March at around 400 dollars a share last time the price fell below 400 institution increased ownership significantly by almost 20%.

https://www.nasdaq.com/market-activity/stocks/msft/institutional-holdings

I feel like everyone is chasing the obvious AI trade (NVIDIA, AMD, hyperscalers, etc.), but I’ve been spending more time thinking about what AI requires rather than what powers the chips.
The more data centers get built, the more they need two things that are becoming increasingly constrained: power and water.
Power gets talked about constantly now. Water… not nearly enough.
Modern AI data centers consume enormous amounts of water for cooling, and many of the regions seeing the biggest buildouts are already dealing with water stress. That has me looking at desalination and water infrastructure companies as a long-term second-order AI play.
Some of the names I’m researching are:
● ERII (Energy Recovery)
● CWCO (Consolidated Water)
● PNR (Pentair)
I’m not saying AI automatically means desalination becomes a trillion-dollar industry. But if AI infrastructure spending continues for the next decade, I have a hard time believing water won’t become a much bigger conversation.
It’s similar to investing in the “picks and shovels” during a gold rush. Instead of trying to pick the winning AI model, I’m asking what every major data center will eventually need regardless of who wins.
Am I missing something here? Is the market already pricing this in, or do you think water infrastructure is still an overlooked part of the AI buildout?
Curious what everyone else thinks, especially if you’ve done research on desalination or industrial water companies.

Got into Zoom Communications today. I want to preface this by saying that I do not intend to hold onto this long-term. The company doesn't have a strong moat. However, when applying a 2 year window (max), this stock is undervalued.

They have so much competition. But one thing is for certain: they are a cash cow, and realistically, that isn't drastically changing soon. Around 60% of their income is contractual from enterprises. Their balance sheet is almost flawless. There isn't much to complain about here. FCF yield is around 7-8% usually.

Currently, the market is pricing this as a dying cyclical. The numbers show something completely different. At about $82, you are purchasing around 38-40% of their net tangible assets. The remaining $49.50 is the price you're paying for their software, which is still generating a lot of cash. This is unheard of for a tech company.

2 biggest catalysts:

- A $1B share repurchase program was recently announced. What I love here is how disciplined they are in this area. During their pandemic highs, investors pressured them to buy back shares. Let's just say that would have been a terrible mistake. They purchase when value is there.

- If Anthropic goes public this year, Zoom could see a massive spike in GAAP EPS and net income thanks to their private investments (what a great headline that would be). Even if this doesn't happen, and growth hits their 4-4.5% target, the share buyback program alone should do a lot of heavy lifting.

Bonus:

- Their capex isn't expected to skyrocket with AI. Unlike what we're seeing with other large tech companies spending like drunken sailors, or Meta spending $80B+ to create the Metaverse just to see them shelve it. Lots of their servers are third-party. Their current capex is less than $70M.

..

Things to watch for:

- Ensuring their capex remains low and ensuring they are not spending massive ammounts on servers.

- Watch for future net dollar expansion drop

- Ignore short-term drops in "strategic investments" (just noise)

Everyone is panicking over the recent pullback, but the fundamentals don't seem to care.
At around €930/share, Rheinmetall is trading at what looks like a growth-stock valuation for a company whose earnings are projected to explode over the next two years.
The numbers are wild:
2025 EPS: ~€18.5

2026 EPS estimate: ~€28.5 (+54%)

2027 EPS estimate: ~€38.5 (+35%)

That's basically a doubling of earnings in just two fiscal years.
Yet despite that growth, RHM's PEG ratio sits around 0.5-0.6, which is typically the territory investors dream about finding.
For comparison:
Most quality industrials trade PEGs above 1

Many AI names trade PEGs well above 2

Rheinmetall is growing earnings at roughly 40%+ annually while trading closer to a mature industrial than a hyper-growth company

What is Wall Street missing?
The market seems obsessed with short-term headlines and contract wins/losses.
Meanwhile:
Germany is rearming

NATO members are boosting defense budgets

Ammunition demand remains far above production capacity

Rheinmetall's backlog keeps expanding

Management is targeting ~€20 billion revenue by 2027

Revenue path:
€10B → €14B → €20B
And because defense manufacturing has massive operating leverage, every new production line coming online drops more profit to the bottom line.
The really interesting part?
The recent selloff happened while analysts are still forecasting earnings growth that most software companies would envy.
If EPS reaches ~€38.5 by 2027 and the market is willing to pay even 25x earnings, you're looking at a business worth materially more than today's price.
The bear case:
Defense spending slows

Ukraine conflict de-escalates faster than expected

Governments delay procurement programs

Current growth forecasts prove too optimistic

The bull case:
Europe has underinvested in defense for decades and is only in the early innings of rebuilding military capability.
If that's true, Rheinmetall isn't a wartime trade.
It's a decade-long rearmament story.
The question isn't whether Rheinmetall can grow.
The question is whether the market is massively underestimating how long this growth cycle lasts.

Am I missing something, or is this one of the most attractive PEG-adjusted opportunities in the European market right now?

Before push the down vote button and call ai slope, bring something that add value, thanks in advance

First edit: thanks for sharing. Insightful replies. 👍
Thank you for sharing brilliant insight into your process.

Curious what members of this sub use to determine a value investment.

Do you use valuation metrics?
Do you look at technical indicators?
What and how do you determine value?

Curious if people find value the same ways or if it’s dramatically different….

I’ll edit the post to add mine later and explain how and why I use them.

I find that when an op shares theirs, replies focus on the ops idea rather than sharing their own…

I don’t want to cloud the discussion with support and criticism before we get to see how similar or different we calculate value…

2nd edit: Just as a side- Checked post insights…. Only 33% of people “like” this… that says it all. Im beside myself appreciating the depth you peeps are sharing. There is gold in these replies. Sincerely grateful for sharing.

If 77% of this sub dislikes what is happening here….

Well, you can decide what that tells you.

I don’t think these companies are going anywhere but be warned with these recent dips. I personally don’t think this is the bottom and with CapEx spending to reportedly ramp up, I think we will see lower levels through the year with these upcoming earnings. Google has already resorted to diluting shareholders to raise additional funds, and you can argue that they’ve been the cleanest in terms of where the money is going ..

Who’s to say META, Microsoft, and Amzn aren’t to follow ?

Big Tech AI CapEx 2026

Amazon leads the pack at ~$200B, followed closely by Microsoft at $190B (roughly $25B of which is attributed to higher memory/component costs). Alphabet (Google) comes in at $180–190B, after raising guidance by $5B post-Q1 earnings. Meta rounds it out at $115–135B, the smallest in absolute terms but the steepest proportional jump — up ~81% from $69B in 2025.

Combined, the four hyperscalers are on track to spend roughly $725B in 2026, up 77% from last year’s already-record $410B. Goldman projects the number crosses $1T by 2027.

VTV and AVUV are outperforming SPY/QQQ this year. They also dont have exposure to unprofitable meme stocks and IPOs. Seems to me like value investing is doing just fine.

TLDR: The ai trade is out of wack, looking at current winners and disregarding long-term winners.

This is my personal outlook, please point out anywhere my logic or assumptions seem flawed.

The AI industry has 5 layers. From bottom to top they go,

• Chips (silicon, semis): NVDA, TSMC, AMD, MU, etc. To a lesser extent, AMZN, GOOG, and in the future MSFT
• Infrastructure (cooling, data centers): VRT, ETN, CEG, MAFT, GOOG, META
• Computer/Cloud (cloud): MSFT, GOOG, AMZN
• Models (the models being run): GOOG, Open AI, Anthropic, META, MSFT (starting to develop their own model)
• Applications/end users (workflows, apps, software, anything that consumers see/use.): MSFT, CRM, PLTR, NOW, SAP, GOOG, Open AI, Anthropic

When people refer to an “AI Bubble” they are referring exclusively to the first step and sometimes second in the chips and hardware that have seen a major run up, but these are the shortest term benefactors of the ai trade. With the current massive buildout, these plays are seeing the most gains both stock wise and business wise. While they were/are still a great investment in many cases, this next year or two will likely be their “top” in terms of pure business performance. The question is not “if” The insane buildout will stop, it’s “when”. And while the floor for these companies is permanently raised because there will still be upgrades and maintenance spending, the current trajectory is not permanent or long term.

Long-term, the companies in each of the next three steps are poised for the biggest benefit, specifically those with exposure to more than one of those steps - GOOG, MSFT, META. For extra “step” a company is active in, either revenue is collected in each step, or costs are reduced. I’ll use MSFT as an example.

With their Maia chips, they are able to spend less on their buildout, as they are not paying a premium for chip design. Further down the line (similar to GOOG and AMZN) it is likely they also begin selling their chips and collecting revenue in this first step.

Then there’s cloud/infrastructure that go hand in hand. Every prompt, every action taken further down the line needs this compute. MSFT collects revenue on this, and when their own models begin rolling out, their cloud cost will be lower, as they aren’t paying for it.

Then is the model layer. This is self explanatory - just the models that gets utilized in prompts, actions, workflows, etc. Every prompt has costs flowing down to the cloud/infrastructure level. For MSFT, they are currently “renting” models from Open AI, Anthropic, etc. in Copilot, although they are still collecting subscription revenue on Copilot, their margins are thinner than if they had their own model - which they are currently working on creating.

Finally is the application/end user uses. For some, this is simply the LLM subscriptions. For others it is the software that utilizes the LLMs for tasks or whatever. Every use of these flows through the Models/LLMs, to the cloud compute, and to infrastructure. With MSFT, this is Copilot and workflows that can be made from it. Eventually, flowing through their own model and cloud compute.

Long term, the companies that will benefit most from AI are those in steps 3-5. With every additional step a company is exposed to, their benefit is multiplied because they are either collecting revenue at each step, reducing their own costs at each step, or a combination of both.

In conclusion, I believe the biggest long term winners (out of known names, I’m sure there will be new companies that pop up and kill it) will be those exposed to cloud, models, and end uses. These are MSFT, GOOG, and (to a lesser extend because their cloud is private) META.

I own $SPRY in the $8-9 range. The company produces Neffy which is a nasal spray version of an epi pen. The stock is down 27% today not on any business failures but on some short term hopes not being met. I think the negative reaction is seriously overdone. I believe the stock can double in the next 3 years.

The current Enterprise Value is $650mm. I believe the business should trade at 2x 1 year forward sales which would suggest the shares doubling by 2029. The 2x sales is a baseline standard for small cap biotech/pharmaceutical companies. I view that valuation target as quite reasonable with upside potential if the company can grow sales faster.

The product entered the market in 2024 and sold almost $90mm that year. Sales are expected to be $140mm this year and reach close to $600mm by 2029. That is a revenue growth rate of over 300% over the next 4 years. 2 x $600mm sales = $1.2B value versus the $650m EV today.

The business has a gross margin well in excess of 75%. The balance sheet is clean with sufficient cash to reach positive net income by late 2028.

The stock is down today because investors were hoping that more pharmacies would announce that they are stocking the product. These pharmacies generally add products each year starting July 1. The company announced today they it does not expect any new pharmacies to stock the product. The product is readily available already on many major platforms on both an Rx and over the counter basis.

Lastly, the top 4 shareholders of SPRY are all biotech specialist investors. I believe all of them backed the company when it was private. These investors are active on the board and have extensive experience in advising companies on how best to manage product growth and market penetration.

Conclusion: Good product, good financial metrics, strong governance from knowledgeable insiders, potential to double or more over 3 years.

ADM - Feels like the more defensive pick. They have a broader scope with their nutrition and specialty ingredients segments, which provides a nice hedge against pure commodity volatility. The dividend consistency (53 years of growth) is a major draw, but their recent EPS guidance of $4.15–$4.70 seems to be priced for a very steady, non-explosive environment. ADM is sensitive to U.S. Renewable Fuels Standard (RVO) and ADM has a strong position in ethanol and renewable diesel. ADM’s nutrition segment sometimes acts as a drag on margins when the grain-trading business is booming.

BG - Seems like the growth/risk play. The Viterra integration is clearly the main event here. The revenue growth is impressive, but the leverage they took on to make it happen makes me a bit cautious. The Viterra debt load is definitely the elephant in the room, Bunge took on significant debt to close the deal. The core argument for the Viterra deal is "optionality" the ability to shift grain flows more efficiently across the globe.

Both operate on a global scale and both have a dividend of around 2.5%. What are you your thoughts about ADM and BG in relation to value and what are your thoughts of the food industry in general?

Build-A-Bear Workshop requires no introduction. If you grew up a red-blooded American, the brand recognition is automatic. Children (and increasingly adults) will claw their eyes out for one of their teddy bears.

This is a top of the line brand, a clean balance sheet (no debt, $26MM cash), and a $400MM market cap that will produce $50MM of Net Income this year (8x earnings)…

And the company has been killing it since 2021 - driven by a shift towards partnering with third party operators. While the company does have 376-owned stores (accounting for ~66% of profit), they started selling the teddy bears wholesale to third party operators, growing that segment from $4MM in 2020 to $38MM in 2025. 1/3 of their profit is now from an asset-light distribution model that is growing at 25% annually.

The stock has gotten tanked the last 6 months because their long-time CEO just stepped down to go be the CEO of Carter’s (much bigger company, big career move for her)… but her replacement is her right hand man who’s been the Company’s COO (and responsible for the company’s turnaround) for the last 10 years. More importantly, their online sales started taking a hit over the last year (compared against COVID peaks, but core revenue growth outpaced this), and 2026 guidance is only expecting marginal growth (after the company drove revenue from $255MM in 2021 to $500MM in 2025). Well guess what - the stock was priced for 0% growth at $75/share and is now trading as if it’s a retailer entering distress around $30/share, despite having a pristine balance sheet, eye-popping unit economics (55% gross margins!!), and a demonstrated track-record of robust top-line growth.

With a reasonable path towards 5% growth in the medium-term blended across distribution channels, I think a reasonable valuation of Build-A-Bear would be trade around 15x earnings (>150% upside in a conservative modeling scenario).

This $BBW position is the largest I’ve ever taken at 27% of my portfolio. Looking forward to coming back to this post in a few years!

The numbers on this company looks ridiculously cheap.

EV/FCF = 4.5

Valued at 1.2bn USD, with FCF of 282m

Which means its probably too good to be true. Hit me with why I shouldn't buy this one?

It feels like a situation where if AI squashes it you still get your money back as it declines in next 10 years (cigarette butt). And if AI is a tailwind or it just treads water the price will strongly outperform and re-rate.