Baidu is a leading AI technology company dominating internet search in China, with a mobile platform reaching 648 million monthly average users. It has transitioned from an internet company into an AI technology company, offering a full AI stack and core AI capabilities. Baidu was affected by the COVID-19 outbreak and China's COVID-Zero policy, but is well-positioned to benefit from the economic recovery as industries like travel and local services bounce back. Baidu's stock was indirectly affected by China's regulation of its internet sector, but the regulatory impact on Baidu is limited given its low revenue exposure to video gaming and K-12 private tutoring. Baidu's shares traded at a 30-40% discount to Tencent, Google, and Meta, presenting an opportunity for investors to capture both near-term economic recovery and long-term AI growth prospects in China.

Cognizant is a leading IT services provider with a narrow moat business strategy. The company has strong technical capabilities in nuanced enterprise IT solutions, such as artificial intelligence services, which can help it become better known for digital transformation. Reacceleration in growth is possible through investment in technical capabilities, strategy consulting operations, and a diversified client base. Cognizant's narrow moat rating is due to intangible assets and customer switching costs associated with its services, particularly in business process outsourcing as a service. The fair value estimate for Cognizant is $91 per share, with a predicted five-year compound annual revenue growth rate of 9%. The author is bullish on Cognizant's future under new CEO Ravi Kumar, who has experience in the IT services industry and is expected to lead the company with caution and risk-taking in the digitizing industry. Cognizant has a history of capital allocation marked by a strategy pivot in response to activist investor pressure, but has since returned to a growth focus while still increasing dividends.

Seagate is the market leader in hard disk drives and a key supplier to the "hyperscale" cloud storage market. The company is facing headwinds from an industry-wide decline across computing parts and semiconductors, but this looks to be a short-term issue due to the cyclical nature of the industry. Seagate has advantages in terms of production capacity and cost efficiency due to its diverse manufacturing footprint and vertical integration. The company is continually innovating and has pioneered many new technologies. Seagate has a strong presence in the enterprise storage market and is a supplier to major cloud providers such as AWS, Azure, and Google Cloud. Seagate's Lyve cloud platform has also continued to expand across new regions. Seagate reported poor financial results for Q3 FY23, but management has been proactive in adjusting business expenses for a lower-demand environment. Seagate aims to simplify its product roadmap and match manufacturing capacity with demand. Seagate offers a 4.49% forward dividend yield, and the author has used a discounted cash flow model to value Seagate and forecasts a fair value of $84 per share, indicating that the stock is currently undervalued by 26%. Despite the challenging period Seagate is facing, the author sees it as a play on the continued growth in storage for the cloud industry and deems it a "buy" for long-term investors.

The article discusses EOG Resources, a company that has become a low-cost leader in the unconventional oil and gas industry due to its early entry and conservative approach to debt levels and key ratios. The company has managed to reduce already low costs and maintain a low corporate breakeven cost, giving them a competitive advantage over later competitors. The industry's breakeven point has lowered due to cost progress and technology advances, potentially leading to years of lower prices for consumers. Investors should consider EOG Resources as a potential investment opportunity, as the company is likely to outperform the industry for the foreseeable future. \n\nThe article also discusses the industry as a whole, stating that decreasing costs at producers have led to more commercial locations on any acreage holding. Reserve reports on companies increase over time, poking holes in the idea that we are running out of locations to drill. Industry growth is being held back by the lending market demand for more conservative industry balance sheets and market demand to return capital. In the past, leveraged growth and reinvestment of earnings led to fast production growth, and it may become more acceptable to reinvest earnings to grow again as memories of the 2015-2020 period recede. The article also highlights EOG Resources' plans to continue with its current strategy of organic growth and maintaining a strong balance sheet while returning money to shareholders through dividends. The company's competitive moat is due to its low operating and corporate costs, which have been kept low to maximize profitability from prime acreage acquired early on. EOG Resources' conservative balance sheet and low costs make it more likely to maintain its base dividend compared to others in the industry. The company's push to continue reducing costs could lead to an era of low prices for consumers, led by a low-cost leader like EOG Resources. As technology advances, more formations are likely to become economic to produce, providing opportunities for growth in the unconventional industry.

The author is bullish on Republic Services, the second largest waste management company in the US, with a market cap of $45 billion. The waste management industry is somewhat anti-cyclical, and Republic Services holds a significant position in the North American environmental services/waste management market. The company's growth strategy focuses on market verticals with above-average growth rates and attractive return profiles, driven by its unique capabilities in customer service, digital innovation, and sustainability. The company has strong pricing power, with half of its pricing strategy relying on the open market and 17% of its prices linked to the CPI. Republic Services is investing in innovative methods to convert trash into profitable resources, such as extracting methane from decomposing waste and integrating it into the natural gas grid for energy production, equipping recycling facilities with advanced automation technologies, and installing gasworks in its landfills to generate electricity and supply utility pipelines. The company expects to see incremental tailwinds to its business from plastics and landfill gas investments scheduled to come online in 2024 and beyond, providing a new long-term tailwind for the company. Republic Services is a cash cow with solid long-term growth and a healthy balance sheet. The company's M&A strategy boosts revenue and leads to a better balance sheet.

Merck is a sensibly valued "Big Pharma" company with a market cap of $282bn, a price to sales ratio of ~5x, and a dividend yield of 2.63%. Merck's net income of $14.5bn in FY22 is the third highest of the "Big 8", and its net profit margin of 25% is the second best in the sector. Merck's share price performance has been the best in the "Big 8" after Eli Lilly, up 44% over a 3-year period, and up 21% over a 1-year period. Merck's revenues increased by 22% in 2022, driven by COVID antiviral Lagevrio and cancer drug Keytruda, which accounts for over 40% of total revenues in Q1'23. Merck's vaccines division, particularly Gardasil, is strong and continues to grow. The Hospital Acute Care and Animal Health divisions provide steady income, but the diabetes and immunology franchises are shrinking. Merck's acquisition of Prometheus Biosciences for $10.8 billion is aimed at gaining market share in immunology, particularly in ulcerative colitis and Crohn's Disease, with the lead candidate PRA023. Merck needs to protect its lead asset, Keytruda, and extend patent protection to continue growing revenues after 2028. If Merck cannot extend Keytruda's patent protection, a decline in the company's share price from its current all-time high price of >$110 is likely inevitable. However, Merck has made strategic acquisitions in immunology and respiratory disease markets, which are large and lucrative. Merck's partnership with Moderna is some $43bn cheaper than acquiring Seagen would have been. Merck has at least 4 more years of selling and marketing Keytruda while AbbVie and BMY's key assets are already facing patent expiries. Those extra years of exclusivity are worth as much as $100bn to Merck, and if the patent expiration is postponed, Merck's revenues could top $70bn per annum, and its market cap valuation could exceed $350bn based on a rule of thumb valuation of 5x sales. Merck stock looks like a good buy even at the current all-time high share price, with 25% upside in play and good downside protection, including the dividend.

Comerica may face legal and regulatory issues related to its handling of the Treasury Department program Direct Express, but the scale of the program and alleged fraud do not appear to be massive with respect to the bank as a whole. Comerica is predominantly a commercial-focused middle-market bank with concentrations in commercial real estate, dealer floor plan lending, and mortgage banking. The bank is very leveraged to interest rates and has been one of the biggest beneficiaries of the current higher rate backdrop. Comerica has a narrow economic moat rating due to maintainable cost advantages and switching costs. The fair value estimate for Comerica has been decreased to $76 per share from $79, but the bank is still viewed as materially undervalued. The author provides a fair value estimate for Comerica of 2 times tangible book value as of March 2023. Comerica's banking business is concentrated in three major markets, making it exposed to the macroeconomic trends of each of these states. The bank has invested in expansion efforts in California and Texas, building up a solid, commercial-focused franchise with low-cost deposits in key markets. Risk management has been good, with the bank avoiding poor underwriting risk-taking. Comerica's profitability has been pressured since the crisis due to lower interest rates, but this is not the fault of management. The author sees a conservative underwriting culture remaining in place and a bank focused on relationships with its core middle-market clients, positioning the bank well for the future.

Leslie's is the largest direct-to-consumer brand in the U.S. pool and spa care industry, serving residential, professional, and commercial consumers. The company has experienced top-line growth in the worst economic cycles and controls the entire process from manufacturing to the point of sales. Leslie's is a one-stop-shop for pool diagnostics, providing a proprietary AccuBlu rapid testing option and tailored solutions designed to meet each customer's needs. The company operates ~1,000 stores, a footprint 5x bigger than its 20 closest competitors combined, and has more prominence on digital channels. Leslie's is the strongest player in a highly predictable industry with annuity-like revenue, and 80% of its revenue is considered recurring and non-discretionary. The company is expected to continue driving top-line growth over the long run, and shares traded at a discount of 50% to the estimated private market value.