Growth Stock Thoughts
An Investment in Knowledge Pays the Best Interest
Benjamin Franklin
Gold’s Resurgence in a De-Dollarizing World
• China/BRICS is actively working to reduce global trade’s dependency on the US Dollar, settling international agreements in their currency, the RMB.
• The US faces numerous economic problems, from the credit rating downgrade to ballooning debt and an aging population.
• Central banks have significantly increased their gold purchases, with a 152% year-over-year increase in 2022, primarily driven by countries like China and Russia seeking to move away from the US dollar.
• Gold has been a historically stable value asset, now being one of the only options now that Treasuries are falling out of favor internationally hinting at its potential to reach unprecedented price levels.
Riley Exploration Explores New Area in New Mexico
• Strong expansion plans in the same basin in New Mexico, expecting 15% free cash yield from the project and the project being accretive in year 1.
• Expecting an 80% increase in production from FY22, with an 18% decrease in expenses.
• If oil prices stay in the $70 area, REPX expects $42-55 million FCF. Similarly, oil prices around $70 will have FY23 leverage at 1.8x debt to EBITDA.
• OPEC stated no oil output increases until FY24; EIA expects oil prices in the $80 range for 2H23 and 1H24.
Generac Generates Significant Opportunity with Acquisitions
• Increasing demand for uninterrupted power in the industrial space due to data requirements and increase in consumer demand due to the above-average outage hours the US has experienced over the last 3 years.
• 10GWh of currently installed capacity, with addressable market set to expand by 5x by FY25.
• Aggressive M&A to penetrate new markets, with each 100 basis point increase in penetration equating to $3 billion in total addressable market.
• Strong international growth should offset weakness in US domestic consumer market.
ALB: Doubling In Size Inside a Decade
• Second largest Lithium producer in the world.
• 3 Expansion opportunities within the next decade, expecting global lithium demand to surge by 275% by 2030.
• Favorable pricing above $20/kg has made >100 locations viable for expansion.
• Global focus on electrification creating surge in demand for Lithium.
ONSemi Sweet Spot for High Growth with Fab-Light Model
• Double Digit Secular Grower with Reasonable Valuation
• $16.6 billion in backlog, with $2.5 added in 4Q22.
• Divesting from low-margin industries and fabs, trading top line revenue for investing in high-margin products in markets with less competition.
• SiC (silicon carbide) leader, producing higher margin wafers in fewer facilities.
• Repurchasing $3 billion in shares to FY25, with $698 million in 1Q23. Targeting 50% FCF return to shareholders.
Video: Bloom Energy’s BE Growth Blooms with IRA. Profitable Hypergrowth is Possible.
• IRA (Inflation Reduction Act) should accelerate growth for fuel cells.
• Hypergrowth sector, 2050 neutrality targets, and 2030 reduction targets are approaching fast.
• $10 billion in total backlog, $2.8 in new product backlog.
• First commercialization in carbon capture, expanding hydrogen cells and electrolyzation to Europe. Large expansion in the maritime segment, first successful deployment of a Bloom energy cell on a vessel.
• IRA tax credits significantly incentivize new installations and expand existing modules. Offering $3/kg of hydrogen produced over the electrolyzer’s or fuel cell’s lifetime.
Baidu: Major Potential For China’s Tech Titan
• Strong leadership positions in numerous hypergrowth sectors will drive strong growth expected into 2030.
• Apollo Go self-driving taxis are chartered in several major Chinese cities.
• Macroeconomic recovery in China, the zero COVID policy ended with lots of pent-up demand from consumers and advertisers. Baidu is a leader in search in China.
• Expecting tailwinds in advertising space, as firms shift from cost-saving measures to returning to expansion.
Video: Mobileye MBLY SuperVision Provides Future Growth Avenue. 35% CAGR Revenues and EPS.
• Leader in driver assisted and autonomous driving vehicle technology.
• Strong growth in advanced driver assistance systems, despite making up under 1% of volume, SuperVision makes up 33% of revenue growth.
• $17 billion in contracted sales cumulatively through 2030, with an average system price of $105 expected compared to the current $56.2.
• Robust real-world implementation of SuperVision, with 96,000 units deployed in FY22. Expecting over 100% growth in units shipped for FY23.
• Backed by strong consumer demand for more safety features and more fatigue-reducing driver features.
Bloom Energy’s Growth Blooms with IRA
• IRA (Inflation Reduction Act) should accelerate growth for fuel cells.
• Hypergrowth sector, 2050 neutrality targets, and 2030 reduction targets are approaching fast.
• $10 billion in total backlog, $2.8 in new product backlog.
• First commercialization in carbon capture, expanding hydrogen cells and electrolyzation to Europe. Large expansion in the maritime segment, first successful deployment of a Bloom energy cell on a vessel.
• IRA tax credits significantly incentivize new installations and expand existing modules. Offering $3/kg of hydrogen produced over the electrolyzer’s or fuel cell’s lifetime.
Fiserv: Deep Value Through Dominance In Payments
Fiserv (NASDAQ:FISV) is a financial technology firm specializing in payment processing. Through aggressive M&A, Fiserv hopes to establish a competitive advantage through advanced platform features. Fiserv has consistently outperformed its own estimates and has successfully leveraged several M&A actions in FY22 to gain a foothold globally. These merger actions have already realized $700 million in additional revenue due to acquisitions, 2 years ahead of schedule.
Taiwan Semiconductor Dominates Leading Edge
• Semiconductor market is expected to double in size by 2030. TSM (Taiwan Semiconductor Manufacturing) accounts for 26% of the world’s semiconductor output.
• Largest pure play fabricator, strength comes from long-term relationships.
• Scale and leading-edge technology as one of the only sub 7nm wafer technology manufacturers in the world.
• International expansion slotted in Japanese and American markets driven by a $100 billion CapEx (Capital Expenditure) expansion.
• Western governments want to distance domestic technology products from China and bring manufacturing back to their countries or local allies.
• The US CHIPS and Science Act provides roughly $280 billion in new funding to boost domestic research and manufacturing of semiconductors in the United States.
SuperVision Provides Future Vision for Mobileye
• Strong growth in advanced driver assistance systems, despite making up under 1% of volume, SuperVision makes up 33% of revenue growth.
• $17 billion in contracted sales cumulatively through 2030, with an average system price of $105 expected compared to the current $56.2.
• Robust real-world implementation of SuperVision, with 96,000 units deployed in FY22. Expecting >100% growth in units shipped for FY23.
• Backed by strong consumer demand for more safety features and more fatigue-reducing driver features.
