Taking a break from the local scene, let’s take a look at how the top counters in my US portfolio are doing in the recent quarter.
A scan on the numbers show that the two titans continue to trudge along with good earning. Under the current tough macro environment, growth took a back seat at the moment for AAPL. I have no doubt though that she will continue to grow with her ever increasing installed base. Also, India looks set to be the next market to ramp up.
MSFT has a strong Q3 with revenue and EPS up by 7% and 10% respectively. OpenAI is likely the next growth driver. It is too technical for me but I am seeing big names adopting Azure OpenAI Service and OpenAI API. While it is still early days, the potential looks huge and that will also benefit my top US holding – ANET!
The numbers for ANET continue to amaze, with revenue and EPS up by 54% and 61% respectively! Yet her share price plummeted by 15% after the results announcement. As per usual, the concern is the weakened demand from the cloud titans for the coming quarters. They endorsed the 26% revenue growth for the year which translated to lower growth numbers in the remaining quarters. So basically, short term pressure in the coming quarters due to the tough comparable from a very strong performance last year.
Looking further, ANET has projected a total addressable market of $51b by 2027. With current year’s revenue expected to come in at $5.5b, that’s lot of room to grow into. Of course one can always argue that they might not get the business but past decade track record does indicate the leaders can do it.
I would take the current drop in price as an opportunity to add more. Not in a rush as I am still reviewing my other positions but definitely in the pipeline. If you are interested to learn more about ANET, click here to read a free 2019 article from The Motley Fool. It is more than three years old but still relevant.
SHOP jumped more than 30% after she announced her results. She beats analysts’ estimate and turns in a profit for the quarter The biggest news must be SHOP is getting rid of its logistics business! I am surprised by the move since they just acquired Deliverr not that long ago. In any case, the logistics business will be sold to Flexport, who will become the preferred logistics partner for SHOP.
I am perfectly fine with building the fulfilment centres. It makes sense to me but selling it away and making Flexport their partner is not a bad strategy too. Going forward, we can expect SHOP’s profit and cash flow to increase. Besides the selling of logistics business, the new pricing plan for existing customers came into force since the last week of April.
ISRG is growing her top line but bottom line is flat. There is no doubt ISRG is a top dog but her valuation has always been steep. And current PE is even higher than the past 5-year average of 65x. It does make me wonder if she is too expensive now? Well, with Covid no longer a threat and making new entry to Europe, the growth might return. Hmm, will hold for the moment.
Finally for TSCO, a slightly weaker Q1 but projection for the full year remains unchanged. The number that pops out for me is her net debt which needs about 3 years for cashflow to cover. I do not think it is much of an issue for now but will be definitely keeping an eye on it.
Overall, I am satisfied with how the companies are progressing. I have the above counters for two to five years and should still be holding on to them for the next few years.