While US stocks constitute less than 30% of my overall portfolio, they currently account for a larger number of holdings than SG counters. This approach allows me to develop a deeper understanding of these companies and remain emotionally detached from their price fluctuations.
Over time, a combination of exceptional company performance and increased investment has led to a more concentrated portfolio, with the top six counters comprising nearly 70% of the US holdings.
In this post, I will briefly share the recent performance of my top three positions: Arista Networks (NYSE: ANET), Intuitive Surgical (NASDAQ: ISRG), and Shopify (NASDAQ: SHOP).
Arista Networks Delivers Another Quarter of Exceptional Growth
Arista continues its impressive growth trajectory, reporting another strong quarter. Revenue grew 15.9% year-on-year (YoY) to US$1.69 billion, while earnings per share (EPS) climbed an astonishing 34.2% to US$2.08.
These numbers are made even more impressive after considering its incredible growth over the past five years. This momentum shows no signs of slowing down.
Arista is making significant strides in its new Ethernet AI Networking Platforms. It has transited from trials last year to pilots this year and gearing up for broader deployment in the coming year. Additionally, the company appears to be steadily gaining market share in other key verticals.
While I lack in-depth technical knowledge of what Arista is doing, the management team’s capabilities and historical performance inspire confidence in my continued investment.
Intuitive Surgical: New Growth Driver
Intuitive has weathered the pandemic storm and emerged stronger. The company’s latest quarter saw revenue grew 14.4% YoY to US$1.46 billion, while earnings per share jumped 23.7% to US$1.46.
Its systems are well-loved by practitioners, as evidenced by the increasing worldwide procedure trend. This trend is set to continue with strong positive responses to its latest da Vinci 5 system.
While there may be an upper limit to the number of systems Intuitive Surgical can sell, the company still enjoys a substantial untapped market. Aging population, international markets and possibly new surgical procedures could further expand its total addressable market.
Moreover, the company’s robust recurring revenue model, accounting for over 80% of its total, ensures a steady income stream, supporting sustained growth.
Shopify: Growing into its Potential
I was awed when I first learnt about Shopify’s growth model five years ago. However, my early investments were overly optimistic as the company benefited significantly from the COVID-19 pandemic.
Post-pandemic, normalised growth and the financial burden of the logistics acquisition caused the share price to plummet over 70% from its 2022 peak.
Shopify’s sale of the logistics business last year and renewed focus on becoming a unified commerce operating system for their merchants have revitalised its growth trajectory.
The latest quarter saw Shopify’s revenue grow by 21% to US$2.0 billion. Its key performing indicators such as Gross Merchandise Volume, Gross Payments Volume, Subscription Solutions Revenue, and Monthly Recurring Revenue are performing well, growing above 20%.
While earnings remain volatile due to massive investment for its future growth, Shopify continues to generate positive free cashflow.
It has been free cashflow positive for seventh consecutive quarters, with double-digit margins for the last four, since the sales of the logistic businesses.
I share management’s view that Shopify has a substantial growth runway ahead.
International expansion presents a massive opportunity, not only for Shopify itself but also for its merchants. Facilitating global growth for its merchants has the potential to generate tremendous returns.
I continue to be in awe of Shopify’s growth model. If the current growth rate can be sustained for the next decade, my early investment, once deemed overly optimistic, could prove to be a remarkable bargain.
The exceptional performance of Arista, Intuitive and Shopify, and promising growth prospects reinforce my confidence in their long-term potential.
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