Alibaba, often referred to as the "Amazon of China," reported mixed financial results for Q1 2023, beating earnings expectations but experiencing a decline in revenue due to macro conditions, specifically China's hard lockdown policy. The company is planning to spin off multiple segments, which is expected to enhance its value, and repurchased approximately $10.9 billion of stock throughout the fiscal year of 2023. Alibaba's Local Consumer and International Commerce segments reported solid growth. The company's cloud segment, which holds an estimated 37% market share of China's cloud market, aims to go public in the next 12 months. Other segments such as Freshippo and Cainiao logistics are also expected to explore IPOs. However, Alibaba faces fierce competition from rivals such as JD.com and PDD Holdings. The author revises up Alibaba's cloud revenue growth, and also revises growth rates for International commerce and Local Consumer segments, and downgrades growth for the Cainiao logistics segment. The author believes that splitting the business could unlock shareholder value and forecasts a strong rebound for Alibaba in the near future.

Tencent posted better-than-expected Q1 2023 results with growth in gaming, advertising, and cloud segments, showing good expense discipline and operating efficiency. The company is well-positioned for growth in advertising, gaming, and fintech, and also holds a competitive position in the AI industry in China. Tencent's overseas gaming revenue outperformed, with titles like 'Honor of Kings', 'CrossFire', and 'Battle for the Golden Spatula' contributing to the growth. The domestic consumption-led Chinese recovery has led to a sharp rebound in offline payment activities, and Tencent's fintech segment has outperformed as well. Despite an ongoing price war with Alibaba Cloud, Tencent's cloud business returned to YoY growth. Tencent's earnings growth visibility in its core business is high, with potential growth options such as new game launches, incremental monetization options, and AI. Tencent's Q1 earnings beat expectations, and it continues to perform well in the improving macro backdrop for Chinese services post-reopening and the more benign regulatory environment. The stock remains reasonably priced relative to an >20% EPS growth outlook through 2023/2024.

Super Micro Computer is an IT solutions company that specializes in HPC and AI computing applications, making it well-positioned in rapidly growing industries. Its competitive advantage lies in its ability to quickly incorporate innovations in the age of AI. SMCI offers "Server Building Block Solutions" and works closely with leading chip design companies to stay positioned on the leading edge of current computing capabilities. The CEO and founder of SMCI has ambitious growth goals for the future, and the author believes that the hype around AI applications is real and will continue to benefit SMCI in the future. Despite the major run-up in shares in the past year, the author recommends a strong buy on SMCI due to its sound fundamentals and potential for long-term value generation.

Mercado Libre is a Latin American internet, technology, and payments company that has grown into a full suite of e-commerce, shops, payments, and logistics. It is essentially Latin America's sole e-commerce and internet behemoth, with six verticals. The most exciting part of the business is Mercado Pago, the payments segment, which has seen its off-exchange payment volumes grow by 122% in the 3Q to $21 billion. The founder, chairman, and current CEO of Mercado Libre, Marcos Galperin, has built a culture that is entrepreneurially driven and technology-first. Despite competition entering their markets, Mercado Libre still sits as the sole eCommerce giant in Latam and is in the driver's seat to shape the face of eCommerce in the region. The company has seen improving financial metrics alongside fast growth and moderating capital expenditures since the middle of 2021, and is currently trading at a high but justified valuation.

Civitas Resources, an upstream company focused on the DJ Basin of Colorado, is in a strong position with a robust location inventory and improving well results. Their recent quarterly performance exceeded expectations, with production and EBITDAX ahead of the street consensus. Management has confirmed the 2023 Guidance for spending and volumes, expecting another flat year in 2024 in terms of volume, given commodity prices and service costs. Civitas offers a double-digit implied yield at $75 oil, and has a $1 B repurchase authorization in place. Chevron's proposed acquisition of PDC Energy is expected to benefit both companies, with a particular focus on the DJ Basin. Compared to PDC Energy, Civitas is potentially undervalued with a stronger balance sheet, better EBITDAX per BOE margins, and a lower TEV/barrel of produced oil. Z4 Energy Research considers Civitas underpriced and expects it to carry a 4x multiple of their 2023 Base Case, with an upside target of $102.50 in the next 6 to 9 months.

Altria Group, Inc. has shown financial strength and improved assets and cash flow, with a focus on returning cash to shareholders through debt retirement and share repurchases. The company has expanded its smokeless portfolio through the NJOY acquisition and exiting its JUUL investment. Altria has announced targets for mid-single-digit adjusted EPS growth and similar growth in dividend yield by 2028. However, the lack of diversification and increased regulatory burden through higher taxes on tobacco are the largest risks to the company's potential returns. Altria has a single-digit P/E and generates an 8% dividend yield. The company aims for 35% growth in smoke-free volumes, but this is still minimal compared to traditional product sales. The company needs more diversification in its businesses. The company's targets for mid-single-digit earnings and dividends growth, along with continued share buybacks, will increase shareholder returns.

Frontier Communications Parent, Inc. has experienced a decline in stock value due to inflationary pressures on their fiber build and adjusted CapEx guidance. However, the company continues to deliver on their fiber buildout, adding 339,000 new fiber locations in Q1 and bringing their total fiber passings to 5.5 million. The company aims to hit their guidance for 1.3 million new locations for 2023. The cost per location for the build is expected to be around $1,000, but this year it may be in the $1,000 to $1,100 range due to increasing costs on the build. The company plans to keep the total cost of the build around $1,000 by mixing in more lower cost locations and focusing on multi-dwelling units. Frontier has delivered on their promise to return to growth mode in 2023, with EBITDA growing year-over-year for the first time in five years. The company's shift to fiber is driving this growth, with the majority of revenue and EBITDA now generated from that segment. Frontier may have tailwinds to offset higher build costs, with expansions adding more customers and building up to the 40-45% penetration level they are targeting. The author is adding Frontier to their 'Buy List' for accounts that seek capital gains, and if the economy does not hit a hard recession, this name could trade back up into the $25/share range (currently $16).

The author maintains a Buy rating on Mastercard, with potential for high-teens annualized return by 2025 year-end. Earnings growth is the main driver of expected returns, powered by multiple engines including still-rising penetration in consumer spend, new flows, and value-add services. Mastercard's Q1 2023 results showed strong underlying growth, with net revenues growing 15% YoY and adjusted EBIT growing 17%. The macro environment remains broadly positive, with resilient consumer spending. Mastercard is well-positioned against potential structural risks in the payments industry, such as FedNow. At $373.75, shares are at 34.5x 2022 EPS, which represented a modestly incomplete recovery from COVID-19. The author expects many more years of mid-teens+ EPS growth and sees 55% upside (18.5% p.a.) by end of 2025. Mastercard's P/E has de-rated from around 46x at 2020 year-end to around 35x at present, leading to suboptimal returns after 2020. Mastercard repurchased $8.8bn of its stock during 2022 and another $2.9bn in Q1 2023.

Activist investor Legion Partners Asset Management is urging Clear Channel Outdoor (CCO) to expedite the sale of its lower-margin European segment, which could help the company repay debt and emphasize its higher-margin US business. Other strategic moves suggested by Legion Partners include selling certain US assets, the Latin American business, and possibly the entire company. CCO aims to sell its European business to convert to a REIT and decrease debt. Competitor JCDecaux may be interested in further consolidation in the European outdoor advertising market. An outright sale of CCO could be possible due to interest from major outdoor advertising providers. Despite the high debt-to-EBITDA ratio of over 10x, CCO's earliest debt maturities are only due in 2025 and 2026. Legion Partners' 2024E SOTP valuation implies a share price target of $3.57/share, but the author believes CCO could be worth $2.31/share or 76% above current share price levels. Challenges for CCO include a difficult M&A environment and a macroeconomic slowdown in Europe. However, recent divestiture of Switzerland operations and the segment's recovery closer to pre-pandemic levels suggest a successful conclusion to the strategic review.

Fulcrum Therapeutics' shares have lost over 80% of their value since the IPO in August 2021 due to FTX-6058 for sickle cell disease being placed on full clinical hold by the FDA in February. However, with new leadership at the helm, including the appointment of Alex Sapir as CEO, the author believes Fulcrum Therapeutics deserves a second look. Fulcrum Therapeutics is focused on developing treatments for genetically defined rare diseases in areas of high unmet medical need. Their lead product candidate is losmapimod for FSHD, a disease that causes muscle weakness and loss of mobility. Losmapimod selectively targets p38α/ß, which reduces expression of the root cause gene DUX4 in muscle cells. The estimated patient population for FSHD in the United States is 16,000 to 38,000, with peak sales potential of $1B+. The phase 2b ReDUX4 study showed clinically relevant benefits, warranting moving into phase 3. Fulcrum's second asset of note is FTX-6058 for the treatment of SCD, which is designed to bind to EED and inhibit PRC2, leading to an increase in HbF. The phase 1b data for FTX-6058 showed up to 10% absolute HbF increases from baseline with no serious side effects reported. The company reported cash and equivalents of $297M for Q1 2023, with an operational runway into mid-2025. The clinical hold for FTX-6058 is related to preclinical data and evidence of hematologic malignancies observed with other PRC2 inhibitors. The FDA wants Fulcrum to further define the population or benefit of treatment with an emphasis on how it outweighs potential risk. The author believes that the negative $100M enterprise valuation for the company is excessive and that it would take very little to move the needle. The author sees potential in Losmapimod in FSHD and FTX-6058 in SCD, but key risks include the FDA not lifting the clinical hold for FTX-6058 and the phase 3 FSHD study failing primary endpoint or having a less than compelling data package.