My Crystal Ball “zun bo” 2024: US Edition

Continuing my prediction series, let’s now turn our attention to the US stock market. Haven’t read my previous post on Singapore stocks? Click here.

Unlike the Singapore stocks, the US stock prediction covers a shorter period of six months due to other commitments. Now, let’s dive into the data.

My predictions may not have been spot on, but the overall performance of these stocks has been quite impressive. It’s worth noting that this isn’t the exact return of my US portfolio, as it’s not equally weighted.

Regardless, I continue to hold most of these stocks, with the exception of CrowdStrike (NASDAQ: CRWD), which I sold in September.

Here’s a look at what I thought would happen versus what actually happened.

Apple Inc. (NASDAQ: AAPL): With its large and growing installed base, this giant is going to carry on to grow at a moderate pace of 15%-20% with increasing dividend.

I got it right about its growing installed base but its overall growth rate has slowed quite a bit. While both revenue and income stagnated over the past two years, the titan is still generating tons of cash.

I did not realise it, but I have sold half of my holdings since 2023. I am likely to hold on to my remaining shares.

Arista Newtorks (NASDAQ: ANET): Benefitting with META and MSFT pursue of metaverse. Its other verticals also look set to continue to grow. Strong leadership will bring ANET to greater height.

With the recent focus on AI, I almost forgot the term metaverse! Arista is the star player in my portfolio. It continues to win market share in networking switches and is currently riding on the AI tailwind.

Besides selling at a portfolio level this year to fund my future expenses, I have held on to my holdings since 2021.

CrowdStrike (NASDAQ: CRWD): Leader of endpoint detection of cloud security, CRWD has a long runway to grow. Valuation is steep with P/CF at 92x! But if it can continue to grow at the current blistering pace of more than 50%, then the valuation is going to stay elevated.

This was another darling in my portfolio until the global outage it caused in July. After some deliberation, I decided to divest my stake and reallocate the funds to other counters.

I have not followed it since my divestment and am surprised that its share price has almost recovered since the July incident.

Intuitive Surgical (NASDAQ: ISRG): With the pandemic waning, ISRG is going to benefit from hospital clearing the backlog of surgery. The demand for robotic surgery will continue to increase and with a recurring revenue of 75%, it bodes well for this leader.

I was right about its recovery from pandemic and the launch of da Vinci 5 this year catalysed market’s interest in this robotic surgery leader!

Intuitive always trade at a premium and sometimes the valuation can be ridiculously high. I reduced my stake when it was trading at a PE ratio of 96x last July but with muted outlook. The price did plunge to below US$300, but before I could take any action, it just zoomed past my sold price and it’s now more than US$500!

Microsoft Corporation (NASDAQ: MSFT): Satya has bring life to MSFT since he took over it in 2014. Windows and Office continue to be the default for many companies. Azure is the growth engine and gaming looks set to grow further with its acquisition of Activision.

Azure continues to be the growth engine but jury is still out on the impact of Activision acquisition. The biggest development since my prediction must be its investment in OpenAI what has allowed the company to integrate ChatGPT to its suite of products.

Besides selling at a portfolio level this year to fund my future expenses, I have held on to my small position.

Shopify Inc. (NASDAQ: SHOP): SHOP will has its fulfilment network done by early 2024. While capital intensive, this would cement its position as the preferred e-commerce platforms. Currently, it is proposing a 10-1 stock split which is likely to go through. CAGR of 20%-30% until end 2024 is definitely achievable.

I was fine with its acquisition of the logistics business but its divestment in 2023 was probably the turning point, allowing it to grow its free cash flow again. It has reported a robust 3Q 2024 results and that has caused the price to spike recently.

I had too high an exposure earlier on and sold part of my holdings last November. I am likely to hold on to my remaining stakes.

Tractor Supply Company (NASDAQ: TSCO): It did not occur to me that a retail farm and ranch stores can grow so fast. I would like to give credit to current CEO Hal Lawton for the current growth spurt. TSCO has been doing well but the past 2 years growth is incredible. Growth is probably going to normalised but with their loyalty members similar to SBUX’s active member, it will continue to do well.

The past two years have been tougher for Tractor Supply. Growth has stalled as it met with several headwinds. However, being able to remain at similar sales and profitable level in a difficult retail market indicates the strength of the company.

I did reduce part of my holding last November but I could not recall the reason. Nonetheless, I am holding on to my remaining stakes.

Veeva Systems (NASDAQ: VEEV): Niche cloud solutions for life sciences industry. CEO guided that the group continues to track ahead of its 2025’s target. In its recent earning calls, they shared that they are taking longer time to close deals as these are larger deals that they have seen before. Assuming they eventually close the deals, VEEV should be able to continue to grow at 20% to 30%.

Veeva’s key development over the past two years has been the transition of its platform from Salesforce to its own Vault CRM. This transition has created uncertainties, causing its shares to trade in a range-bound manner, despite growing revenue and income

The transition has proceeded smoothly, and the recent announcement of a US$6 billion target for 2030 during Investor Day may reignite market interest.

I have maintained my stakes in the company since the prediction.

Zscaler Inc (NASDAQ: ZS): Another cybersecurity leader with blistering growth. Interestingly, it also collaborates with CRWD. A long tailwind for its growth. Valuation is even higher than CRWD, at P/CF of 123!

Zscaler continues to grow its revenue but market is concern about its slowing growth. The company is still making a loss but free cash flow is growing, resulting in a more palatable 43x price to cash flow ratio.

I have maintained my stakes in the company since the prediction.

I am pleased that I have predicted the price movements for most of the counters accurately. However, given the recent bull market in the US, it’s possible that luck played a role.

Ultimately, my predictions for both Singapore and US counters were meant to be fun and not overly serious.

The real value for me lies in the concise, two to three sentence investment theses I crafted for each counter. These brief summaries serve as a valuable reference point when reviewing quarterly earnings and making informed investment decisions.

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