Weekly Roundup
All,
I hope this note finds you well. It has been quite some time since I’ve distributed a newsletter. As some of you are aware, I earned a position as a contractor with The Motley Fool back in November. As part of this deal I am required to write articles for them on a monthly cadence about stocks of my choosing.
This new project takes a lot of time and dedication, and for that reason I sunset my Substack deep dives. Although The Fool articles are relatively short in nature, I feel that they provide a solid overview of the stocks I am buying and selling.
I decided that a nice way to continue on Substack would be to distribute the articles I’ve written for Fool and provide some additional color.
I want to make it clear that in no way is this a marketing attempt to gain Fool subscribers. Rather, I am hoping to reach a broader audience and provide some additional insight into my portfolio.
So with that, here we go!
Recent Articles
CrowdStrike (CRWD)
Article: Here
Disclosure: No current position
Overview: CrowdStrike presents an very interesting investment opportunity. The company specializes in endpoint security, a market that I believe will continue growing as employers embrace remote work. CrowdStrike has become a leader in the cybersecurity space in a relative short time frame, replacing incumbents such as McAfee and Broadcom. I think it’s important to note that CRWD trades a fairly rich valuation considering the company is sub $2 billion in revenue and not yet profitable. By comparison, Microsoft generated $15 billion in revenue from security alone in 2021. Moreover, Microsoft is rumored to be mulling over an acquisition of Mandiant. I may consider a position at the right time and price, but would like to assess future earnings reports before doing so.
Amazon (AMZN)
Article: Here
Disclosure: 25 shares at $2,600 avg. cost
Overview: Amazon stock has been basically flat for a year. The company is facing a number of issues related to supply chain disruptions and inflation. As a result, the e-commerce side of the business is operating near break-even levels. However, the real gem here seems to be Amazon’s cloud business, AWS. AWS is on a $70 billion run-rate revenue and is generating 30% margins. The company has been able to reallocate the profits from this segment to fund other growth drivers in entertainment, digital advertising, consumer electronics, and more. In some ways, owning Amazon stock is almost like owning an index fund. The company operates and dominates in so many different end markets. I believe Amazon is well-positioned for a post-pandemic rebound.
Alphabet (GOOGL)
Article: Link
Disclosure: 5 shares at $2,900 avg. cost
Overview: As many of you know, I believed strongly that Alphabet will be the largest company in the world by market capitalization within the next 5 years. YouTube is now effectively the same size at Netflix in terms of absolute dollars, but is growing almost 3x as fast. The pandemic has certainly contributed to the bump in YouTube’s popularity. But interestingly, consumers seem to enjoy the original content creation on YouTube over Netflix’s series. The fact that Alphabet has one revenue segment that is the same size of another public company’s entire business is incredible. In addition to streaming, Alphabet is making great strides in the cloud, albeit this segment is not yet profitable.
Palantir (PLTR)
Article: Here
Disclosure: 1,200 shares at $20 avg. cost
Overview: Put simply, I love Palantir.
Data 1.0: In the early 2000s, Amazon identified that corporations would increasingly rely on data to make decisions. They had the foresight the data storage should be virtualized, and that physical racks would be replaced.
Data 2.0: Over the last decade several companies have developed web-based widgets that aggregate and synthesize data into easily-digestible dashboards. In some ways, this was a derivative of Microsoft excel. Although these dashboards have proven useful, business leaders are demanding more complex solutions in shorter timeframes:
Data 2A: Enter Palantir. Palantir uses artificial intelligence and machine learning to predict outcomes based on a myriad of disparate siloed data points. The company’s software does not end at a dashboard that someone else needs to interpret. Rather, Palantir works in conjunction with its customers to identify problems and build solutions.
Coinbase (COIN)
Article: Here
Disclosure: 80 shares at $222 avg. cost
Overview: The crypto space is in its early innings. The amount of tokens and other assets like NFTs can be really overwhelming. I’ve come to terms that crypto is here to stay, but I am undecided on its long-term utilities. For this reason, I am “playing” crypto by investing in Coinbase, rather than trying to find the next token that will moon.
Coinbase is an incredibly capital efficient business, and the management team has done a tremendous job identifying growth areas in the cryptoeconomy and investing in them. Namely, Coinbase has developed its own NFT marketplace, and is now able to offer crypto derivatives after acquiring FairX (competitors Gemini and FTX have made similar moves).
When I think of Coinbase, Wayne Gretzky’s famous quote: “Skate to where the puck is going to be, not where it has been” comes to mind.
Coinbase is less focused on the present or past (where the puck has been), but rather focusing on the future (where the puck is going to be). I think these investments are fueling years of growth ahead of its competition setting the company up to remain ahead of the curve.
Closing Remarks
I will send these recaps out each week. If you enjoy them, please reach out with any questions or comments. I’d love to hear from you. Additionally, if you think anyone in your network would enjoy this content, please feel free to share it. This newsletter is free!