Zillow, the leading online property portal in the U.S., is currently undergoing a business transformation following the closure of its iBuying business. Despite a challenging housing market, the company managed to beat its top and bottom-line growth estimates for Q1 2023, with revenue of $469 million. While residential revenue and website traffic declined due to high-interest rates and a recessionary environment, Zillow's rental revenue increased by 21% YoY. The company is also focusing on its home loans business, which saw a 9% QoQ increase in loan origination volume. Despite a net loss of $22 million in Q1, Zillow's financial position remains strong with $3.4 billion in cash and short-term investments. The author revised their revenue decline estimates for Zillow from negative 15% to negative 11% over the next year, but increased their forecasted growth rate for years 2 to 5 to 20% per year. They believe Zillow is currently undervalued, with a fair value of $52 per share (currently $44), despite potential risks in the housing market decline.

Procore Technologies, with its cloud-based Construction Management Platform (CMP), maintains a strong position in the construction industry. Despite industry challenges, Procore reported strong Q1 results, beating revenue and earnings estimates. The company estimates a potential annual market opportunity of $9.4 billion for its current products within their addressable geographies. The global construction industry is expected to grow from $10 trillion in 2017 to $14 trillion by 2025, offering significant opportunities for digitization and digital solutions like Procore's CMP. Procore's platform offers a wide range of functionalities through a single, integrated, cloud-based platform, making it stand out in the market due to its extensive expertise, strong reputation, and seamless user experience. Trading at a forward EV/Sales multiple of 7.7x, PCOR is expected to continue outperforming the broader software market. The author calculates a fair value of $78 for the stock (currently $54) based on an EV/Sales multiple of 10x and an FY24 revenue estimate of $1.1 billion, and maintains a bullish stance on the company due to its potential for growth and strong competitive position.

Stellantis, an automobile manufacturer resulting from mergers between Fiat, Chrysler, and Peugeot, is currently the second largest car maker in Europe and the fourth largest in the US. Led by CEO Carlos Tavares, Stellantis operates in 30 countries and has demonstrated industry-leading operating margins and return on capital. Half of its operating income is generated in North America. The company has €24 billion in net cash and is able to finance itself effectively with equity and trade creditors. Stellantis also has a positive track record with labor relations. Despite the industry's challenges, including technological changes and the need for customer financing, Stellantis has positioned itself well for the future, including spending to remain relevant in the face of a shift to electric engines and autonomous driving. The company's market cap is €46 billion, and it has significant assets, including the Maserati brand. The company is considered a multinational organization, earning profits primarily in dollars and euros.

Royal Dutch Shell, a multinational oil and gas company, has a market capitalization of about $200 billion and has shown strong performance recently. Despite being valued less than Exxon Mobil, Shell's earnings are only $2 billion less. Shell's strength lies in its cash flow, with a Free Cash Flow (FCF) of $9.9 billion, and its Liquefied Natural Gas (LNG) portfolio, which has earned a record $11 billion in earnings over the last two quarters. Shell also has significant future potential, with major projects starting up, including renewable energy and LNG projects. European oil companies, including Shell, have a higher FCF yield than American companies and have stronger transitional portfolios, focusing more on renewable energy and LNG. Shell also has a dividend yield of more than 3.5% and is continuously repurchasing shares while investing heavily in future growth. The largest risks include a potential decline in demand for LNG or renewable energy and pressure to reduce emissions. Despite these risks, the author expects Shell to continue generating double-digit returns, making it a valuable investment.

Delek, a holding company owning four refineries, about 250 gas stations, and a significant share in Delek Logistics Partners, LP, has a market cap of $1.4 billion and an enterprise value of $1.75 billion. The company's position in Delek Logistics Partners, LP, worth $1.65 billion, covers most of its market cap. The adjusted enterprise value, considering net debt and the DKL position, is approximately $100 million. Delek's gas stations are likely valued at $300-$400 million, and the refineries could be worth $1.5 to $2 billion. Thus, Delek appears undervalued. The company has been focusing on unlocking this sum-of-the-parts value, potentially through a transaction to reduce their ownership of DKL below 50% and a sale of the gas station portfolio, while using the cash flow to repurchase shares. However, there are risks including recent management turnover, capital allocation concerns, and lower-than-expected share repurchase guidance for 2023. Despite these, Delek's current valuation seems to compensate for these risks well.

My friend Andrew Walker of Rangely Capital recently wrote up Delek, and he closed his write-up with the following, which I think is a clever and illuminating way to put this situation into context: “At DKL's current dividend level, DK is getting [just over] $2/share annually in dividends from their DKL shares. That's.... just kind of crazy? Again, DK has almost no net debt at this point and is gushing cash flow, and at current prices we're buying them at a low double digit multiple to their dividends from DKL. Obviously "price to dividends from your controlled subsidiary" is not a valuation metric, but it is pretty crazy!”

Union Bankshares, Inc., a small/mid-sized bank, is performing well despite a difficult market environment, maintaining revenue growth, decent returns, and a strong balance sheet. It is managing to withstand the volatile market landscape and maintain consistent revenue growth, mainly driven by its loan operations. Despite increased interest expenses due to higher inflation and interest rates, the bank continues to generate higher returns to fund its core operations. Union Bankshares is managing its operations prudently in the face of the banking crisis and interest rate hikes. It is diversifying its portfolio and adjusting its interest rates to manage these challenges. The company's financial positioning is secure, highlighted by a loan-to-deposit ratio of 81%, which is impressive compared to the banking industry average of 90-95%. The bank also has stable cash reserves and a relatively low cash burn rate, indicating a low risk of default or delinquency. Despite a downtrend in its stock price due to the banking crisis, Union Bankshares offers potential gains, with an estimated 58% upside in the next 12-18 months based on a DCF model. The stock is considered undervalued and is recommended as a buy.

Lazard's revenue growth may face challenges due to the potential of a recession and its exposure to EMEA and Asia. Despite this, the company has a strong position in global M&A and is known for its restructuring expertise. Lazard's revenue is split between acquisition and restructuring advisory and institutional asset management. It has a Narrow Morningstar Economic Moat Rating due to its reputation, geographic reach, and diversification of its asset-management business. The company's fair value estimate is $50 per share (currently $28.50), with an expected annual revenue growth rate of around 3.5% over the next five years. However, Lazard faces increased litigation and regulatory costs, scrutiny over its tax management strategies, and a High Uncertainty Rating from Morningstar. Despite these challenges, Lazard has a sound balance sheet, fair capital investment decisions, and an appropriate capital return strategy. The company's CEO has pruned managing director headcount for future productivity, and its asset management revenue yields are expected to only compress slightly with solid AUM growth. Lazard's management has defended its current publicly traded partnership structure based on tax consequences and equity index inclusion.

United Rentals, the world's largest equipment rental company, has grown through a series of acquisitions and currently has a fleet of over 1 million rental units in 4.6k different equipment classes offered at 1.5k locations. Its main customers are construction and industrial companies, with non-residential construction making up 47% of revenues in 2022. The company has seen significant growth in its specialty rental segment, and it has been investing in digital tools to enhance customer experience. The North American rental market, growing at 4%-6% per year, provides ample opportunity for United to gain more market share, especially with the boost from the $1.2T Infrastructure Investment and Jobs Act. United's strategy of increasing fleet productivity and technology adoption, along with its M&A approach, should contribute to long-term value creation.

Orion Group Holdings reported weak Q1 FY 2023 results but highlighted four catalysts, including the sale of its East West Jones real estate for $36 million, finalizing a new three-year credit facility, a backlog of approximately $1.1 billion, and potential for high single-digit to low double-digit Adj. EBITDA margins. The author argues these catalysts should have pushed Orion Group shares north of $3 per share (currently $2.70), implying the stock is currently underpriced. The sale of the real estate and the new credit facility will improve Orion's balance sheet and provide ample working capital to fund the backlog. Despite Q1 FY 2023 being a poor quarter due to one-off events, management is confident of significant improvement in Q2 and acceleration in the latter half of the year. The author believes Orion is a compelling long-term investment, particularly as management's focus on stress testing and better project scoping/risk assessment should lead to improved gross margins.