🤖📈 This Luxury Car Company Will Beat TSLA in EV

Mercedes announced strong preliminary Q1 results, showing a 3% YoY increase in unit sales, improved net pricing, and profitability. The CEO's strategy to move upmarket is proving successful, with a return of sales of 14.8% in Q1 2023. The company has a generous dividend yield of 7.5% and a 4bn share buyback program, making it attractive for income investors. In 2022, Mercedes reported a 28% increase in EBIT to 20.5bn and a focus on luxury, top-end vehicles, and electric vehicles.

The company's strategy emphasizes dedicated electric vehicles and proprietary car software. Mercedes is making progress in both segments, with BEV sales growing 50% in 2022 and recently announcing the release of the first electric Mercedes-Maybach. As Tesla's dominance weakens, Mercedes and other premium manufacturers are gaining ground with superior quality and technology. Mercedes has received certification for a SAE Level 3 system in the US and is cooperating with Google and Nvidia on software and autonomous driving. The company's focus on premium and luxury markets should limit downside risk, and its commitment to maintaining brand value may reduce pricing pressure. Investors should consider Mercedes as a part of their portfolio.

The article discusses the investment case for Alphabet, predicting low-teens EPS growth once the company has right-sized its cost structure. The Q1 2023 results showed resilient total revenues, with advertising revenues remaining strong despite a pullback in ad spend. Google Cloud's growth has been slowed by weak macro, but the company remains well-positioned to benefit from the eventual recovery in the advertising market.

Alphabet's self-help actions have reduced costs significantly and will continue to generate increasing benefits in the future. The article concludes with a Buy rating on Alphabet stock and a forecasted total return of 83% by 2025 year-end.

Comcast's Q1 broadband customer growth was lower than expected, but solid financial results were achieved through the company's pricing and cost discipline. The new reporting structure combines U.S. and international operations, with average revenue per U.S. broadband customer increasing by 4.5% YoY. The content segment, primarily NBCUniversal, experienced a 21% drop in revenue due to a lack of Olympics and Super Bowl revenue. Peacock added 1 million paying accounts, reaching a total of 22 million, but it could not offset pressure on the traditional television business. Theme parks experienced strong growth with a 25% YoY increase in revenue.

Comcast's core cable business holds competitive advantages in the broadband market, and its high margins on internet access should counter the decline in traditional television. NBCUniversal's unique assets, including core content franchises and theme parks, should help ease the transition away from traditional television. The company is expected to deliver modest growth with strong cash flow for the foreseeable future.

The company possesses a wide economic moat due to its core cable business, their previous major acquisitions have added shareholder value, and Peacock’s content investments are paying off.

The author updates their outlook on Williams-Sonoma (WSM) following its full-year 2022 results, highlighting the company's resilience to recessionary pressures and modest outperformance compared to the S&P 500. WSM's adoption of an omnichannel approach has improved margins and profitability, with e-commerce accounting for 66% of sales. The company's diverse brand portfolio targets various age groups and price points, and its cross-brand loyalty program enables targeted advertising. WSM outpaced the market in revenue growth and profitability in 2022, indicating a gain in market share.

Despite some macroeconomic pressures expected in early 2023, the author remains bullish on WSM's long-term prospects, especially considering its B2B ventures and expansion into India. With no debt and $367M in cash, WSM has a strong capital position and has increased its dividend for 13 consecutive years while approving a $1B share buyback program. Based on long-term average valuations, WSM could yield annualized returns of 33-37% into 2026. Despite near-term growth uncertainties due to macroeconomic factors, the author considers WSM a strong buy and a top pick for a 3-5 year investment horizon.

Berkshire Hathaway offers a good risk-adjusted return profile and downside protection during market selloffs due to its diversification and lower overall risk profile. The company has generated high-single to double-digit growth in book value per share in most years and has a decentralized business model, broad business diversification, high cash-generation capabilities, and unmatched balance sheet strength.

Berkshire Hathaway has focused on reducing its cash hoard through stock investments and share repurchases, with $60 billion worth of repurchases over the past 12 calendar quarters. The author expects the majority of the company's excess capital allocation to be focused on stock and bond investments and share repurchases in the near to medium term.

Although Berkshire Hathaway's insurance business faces competitive and cyclical markets, its economic moat is more than just a sum of its parts. BNSF and BHE generate one third of Berkshire's pretax earnings and contribute 25% to the company's fair value. Meanwhile, manufacturing, service, and retailing operations account for 42% of pretax earnings on average annually and 29% of the company's fair value estimate. The fair value estimate for Berkshire Hathaway is $370 per Class B share. Potential risks and uncertainties include downward trends in the property and casualty insurance market, economic slowdowns, insurance claims exceeding loss reserves, and regulatory oversight. The company's governance issues have led to a lower governance score. Berkshire Hathaway has stagnated in the past decade, struggled to find suitable investments, and some of its larger investments have not lived up to expectations.

CrowdStrike is a leading provider of enterprise-focused cloud-based Endpoint Protection and Threat Intelligence Platform. Despite appearing expensive at ~13x P/S, it remains a solid long-term investment opportunity due to major digital transformation trends and growing demand for cybersecurity tools.

The company is well-positioned to capture opportunities in replacing legacy solutions and adopting multi- and distributed cloud infrastructure. Key factors helping CrowdStrike maintain its foothold include growth reacceleration, comprehensive offerings, and a strong balance sheet for strategic M&As and venture investments. The company had a successful Q4 and FY 2023, with impressive YoY revenue growth. Its partnership with major cloud vendors (Google Cloud and AWS) boosts service discoverability. However, entering the SMB segment may be challenging due to competition and pricing concerns. The author provides a probability-weighted FY 2028 target price of $352.54, with a $141.7 per share target price. While CrowdStrike is a strong performer and market leader in cybersecurity, execution errors could be costly given the stock's premium valuation.

The author is interested in Seagate Technology as an investment opportunity due to its decreasing share price and suffering financials and valuation resulting from a downtrend in the memory storage market. Despite disappointing Q3 2023 results, Seagate has a strong track record of returning cash to shareholders and has not had one unprofitable year in the past twelve years. The decrease in book value is due to the mathematical effect of share repurchases at higher values than the price-to-book value.

Seagate's dividend is well-covered with a low payout ratio, and the company has been repurchasing shares at an average annual rate of 5.96% since 2011. The company's interest coverage ratio is 6.1x, indicating appropriate financing. Seagate is considered a good value opportunity with a dividend yield of 4.91% and total free cash flow yields of 9.5%, making it well-equipped to handle a turn in the business cycle.

Sirius XM started 2023 with revenue and EBITDA meeting projections, despite losing 384,000 self-pay customers. Ad revenue at Pandora held up well, and the company adjusted its full-year guidance for free cash flow and EBITDA. Over the next five years, the satellite service is expected to expand slowly by converting new and used car owners to self-pay and discounting subscription prices. Pandora's addition of podcasts is unlikely to generate significant growth due to competition. Despite challenges, Sirius XM enjoys a cost advantage over streaming platforms with a narrow moat rating.

The nationwide rollout of 5G technology poses a potential threat, but Sirius XM's satellite radio service is already available almost seamlessly nationwide. Morningstar projects average annual growth of 4% for Sirius XM and 3% for Pandora over the next five years. The firm faces competition from streaming services like Spotify, Apple, and Google, which are backed by larger companies capable of spending heavily on exclusive content and access. Sirius XM has a sound balance sheet and a history of share buybacks. The company's acquisition of Pandora in 2019 has been its most significant recent transaction, but there is no clear path for Pandora to accelerate its paid subscriber growth at the expense of larger players, and it is expected to continue to drag on margins. The firm is not expected to make any further large acquisitions and will likely focus on smaller bolt-on acquisitions that have historically helped returns.

The updated fair value estimate for Sirius XM Holdings is $7.50, implying a 2023 price/earnings multiple of 23, an enterprise value of 13 times 2023 adjusted EBITDA, and a 4% free cash flow yield. Total revenue is expected to increase at an average annual rate of 4% from 2023 to 2027, driven by self-pay subscriber growth and increased penetration in new and used car sales. For SiriusXM satellite radio, gross margins are expected to expand to 63.0% in 2027 from 61.8% in 2022. Pandora's average annual top-line growth is expected to be 3% over the next five years, with higher ad rates offsetting the decline in ad-supported listening hours.

The Howard Hughes Corporation is a real estate development and management company that focuses on mixed-use developments, master-planned communities, and commercial properties. Its diverse real estate assets are well-positioned for long-term appreciation in value and rental revenue growth. The company has consistently grown its Net Operating Income (NOI) over the past decade, thanks to successful leasing, strong performance in retail and office segments, and increased residential sales.

Howard Hughes Corporation's distinctive attributes include a focus on master-planned communities with high quality of life and amenities, as well as a diversified portfolio to mitigate risk. Its communities are known for their quality and attention to detail, generating a loyal customer base and recurring revenue. The company takes a long-term approach to its developments, emphasizing sustainable, high-quality communities and properties. Its valuation model assigns reasonable cap rates for stabilized NOI and higher yield rates for unstabilized NOI, resulting in a share value of around $90 (currently $77.93), higher than its current trading price. Investing in Howard Hughes Corporation offers a unique opportunity to gain exposure to a premium real estate developer with a strong financial track record and a diverse portfolio of assets.

The article provides an overview of Berry Global, a plastic packaging manufacturer, including its market position, business segments, and historical growth through M&A. The author analyzes Berry's competitive advantage, profitability, and capital intensity, as well as its balance sheet and debt load. The article also discusses the management and governance of Berry, including its incentive plan for NEOs and market pricing assumptions.

The author presents a DCF model to estimate the fair value of Berry's shares and suggests that the market's implied expectations are punitive. The author believes concerns about lightweighting and substitution risk are overblown, but the company is struggling with high leverage and interest costs that may impact its FCFE. However, the author believes FCFE from the existing business should remain consistent and the company is well-positioned for share repurchases at a discount to fair value. The author has become a Berry shareholder due to the attractive risk/reward.