Generative AI, specifically ChatGPT, is unlikely to disrupt Google's current model of monetizing through ads on transactional searches. Google has a significant distribution advantage with 90% market share in search and most websites optimizing for Google Search. Google has been using machine learning and AI to improve its search engine for years and has even invented the transformer technology underlying generative AI. Generative AI is probabilistic and can return wrong answers, making it unlikely to become the de facto destination for search. Clayton Christensen's book 'The Innovator's Dilemma' differentiates between sustaining and disruptive technologies, with ChatGPT being a sustaining technology that improves the performance of established products. AI does not reduce the marginal cost of generating information to zero, which means only the biggest companies with resources and experience will be able to fund and roll out AI products at scale. Governments are taking strong stances on AI, with heavy-handed legislation in Europe and Canada, which favors incumbents and increases costs for upstarts. These factors work in Google's favor, making it a comfortable position for investors in Alphabet.

Valaris Limited reported better-than-expected Q1 2023 results, but management attributed the outperformance mostly to the timing of certain projects with the company's full-year outlook remaining unchanged from the updated guidance provided in March. Management projected a sequentially weaker Q2. Valaris generated $95.4 million in free cash flow for the quarter thanks to improved margins, positive working capital movements, and particularly a $46 million tax refund. The company released a new fleet status report with total backlog up by almost 15% sequentially to $2.8 billion. Valaris inherited a three-year contract with an estimated value of $500 million after competitor Transocean pulled the Deepwater Athena from a recent Petrobras tender. The company improved its capital structure and liquidity substantially through the issuance of $700 million in new 8.375% second lien notes, entering into a $375 million senior secured revolving credit agreement, and redemption of the company's onerous $550 million first lien notes. Following these transactions, the Board of Directors increased the company's share repurchase authorization from $100 million to $300 million. Valaris has options to take delivery of two high-specification drillships, VALARIS DS-13 and DS-14, by year-end 2023. The author is raising their rating on Valaris stock to "Buy" from "Hold" and urges investors to initiate or add to existing positions on any sign of weakness.

The banking crisis has caused concern for regional banks, particularly those on the West Coast with a reliance on the tech industry, as well as other banks with large exposures to uninsured deposits or commercial real estate or large losses on their fixed income investments. Citizens Financial Group, Inc. (CFG) has been hit particularly hard, down over 30% over the past three months. However, the author believes the sell-off of CFG is overdone and the company is in good operating shape heading into the middle of the year. From a profitability perspective, the first quarter was fairly strong, with net interest income increasing 43% from a year ago and net revenues increasing 29% from the year ago period. CFG has ample liquidity to weather the current environment, with access to the Federal Reserve, Federal Home Loan Bank, and capital markets, and reported total available liquidity of $66 billion. Credit quality at CFG remains in good shape and continues to normalize off of the lows hit during the pandemic years. CFG has a relatively high proportion of commercial real estate in their loan portfolio, but most of it is multi-family and co-op space, while the more concerning office space is only about 4% of the total loan portfolio. At a recent price of $27.79, CFG is trading at a P/E ratio of 6.7x and a P/TBV ratio of less than 1.0, which compares favorably to its peer companies. The author is hopeful that the company will resume regular dividend increases as interest rates and inflation moderate. Using conservative projections, the author sees the stock having a value closer to $35 per share, representing a gain of 26% plus the 6% yield on the stock.

WESCO is an electrical distribution and services company that operates across 800 locations in 50 nations and generated over $21.4bn in 2022 sales. The author rates WCC stock a 'strong buy' due to its ability to generate scale through organic or inorganic means, its chronic undervaluation, and its positioning for long-run growth. WESCO's 'value creation engine' has supported significant scale growth and revenue diversification, in turn supporting greater resilience in the face of macro headwinds. The acquisition of Anixter has accelerated WESCO's foray into communications and networking, allowing the company to address Internet-of-Things growth, 24/7 connectivity needs, and automation. WESCO has demonstrated a marked ability to return value to shareholders through a strategic blend of capital expenditures, inorganic growth through M&A, dividend provisions, and a $1bn share repurchase commitment. Analysts project an average 1Y price increase of 36.33%, reflecting a shared opinion of WESCO's chronic undervaluation given its strong operational capabilities and financial results. Risks and challenges include continued supply chain duress, inflationary pressure, and global operations potentially inhibiting core growth.

Adyen is a payment processing company that has the potential to become a major player in the industry, but needs to improve to compete with Stripe. Adyen achieved strong financial results in 2022, with growth coming from existing merchants increasing their volume or new larger merchants. Adyen's main customers are large or medium-sized companies, with EMEA being their most profitable region. Adyen is a competitor to Amazon, PayPal, Fiserv, and Worldpay in the payment processing industry. Adyen's competitive advantage is that the majority of their full-time employees are based in Amsterdam, where wages are lower, leading to better net profit margins. Adyen's economies of scale and effective use of data help them achieve better approval rates and higher volumes. Adyen is working on a long-term plan beyond payments and plans to have one platform for all merchant needs. Adyen has a high ROIC and is FCF positive without significant SBCs. Adyen's risk is that a few customers account for a large proportion of their processed payments, and losing one would impact the business. Adyen's competitive edge could be further enhanced by their long-term goal of becoming the platform for everything related to payments and beyond.

The author has reestablished a position in CVS Corp, a leading healthcare delivery company in the US, after selling it last February at $105 per share. The author was concerned about the temporary inflation of pharmacy revenues due to Covid vaccination and testing services. CVS owns the largest retail pharmacy and is the number one pharmacy benefit manager. They also offer health insurance through their Aetna subsidiary and have recently acquired Oak Street Health to move into the primary care business. The integrated healthcare service model that CVS has built is unmatched in the industry and should position the company to be a leader in healthcare. The normal earnings power of CVS is $8.50-$10.00 per share, with earnings growth temporarily slowing through 2024 due to the retail pharmacy normalizing from its Covid boost and the company integrating the Oak Street Health acquisition. CVS earnings growth is expected to return to upper single digits by 2025. The author believes that CVS is an excellent business with a leading position in the healthcare industry and that 13-15x earnings is an appropriate multiple for the company. The fair value range of CVS is estimated to be $110-$150 per share. The author initiated their position at $74, allowing for a wide margin of safety to their estimate of intrinsic value.

Darden Restaurants is a multi-brand company that owns and operates restaurant chains in Canada and the US. The company is performing well despite the challenges posed by the pandemic, with its share price close to its 52-week high and outperforming the market by approximately 28%. Darden leverages growth through significant scale, extensive data and insights, rigorous strategic planning, and a results-oriented culture. The company's upcoming acquisition of Ruth's Chris in June 2023 is expected to provide further opportunities. The company has a positive cash flow and solid balance sheet, positioning it for better shareholder returns through dividend payments. However, inflation poses a risk to the stock price if it continues to increase.

Monarch Casino & Resort's financials have improved after the opening of its transformed Black Hawk property, resulting in expanded margins and higher cash generation. Despite this, the company is still trading around 50% below its five-year average EV/EBITDA. MCRI's primary assets are the Atlantis Casino Resort Spa in Reno, Nevada, and the Monarch Casino Resort Spa in Black Hawk, Colorado, both with attractive locations and addressable markets. The author believes that MCRI's financials have reached an inflection point that is not yet reflected in the valuation. The stock is currently trading at a discount to its long-term multiples, presenting an opportunity to buy the stock and potentially benefit from a rerating. However, there are risks such as concentration risk, active litigation, and the potential impact of a recession on the gaming industry. The author recommends a buy rating, but would reconsider if there is a severe recession or significant regulations impacting the gaming industry in MCRI's markets.