🤖📈 Top Trade Ideas from July 5

Victoria's Secret & Co is the market leader in intimate apparel and lingerie. The company has an extensive product portfolio and operates multiple brands, creating cross-selling opportunities and operational synergies. However, since its spinoff and IPO, the company has had mixed financial performance, leading to negative market sentiment. The stock is currently undervalued by almost 70%, but there is uncertainty regarding the company's ability to meet growth and profitability targets. Victoria's Secret has a narrow economic moat based on its brand image and economies of scale. The company's extensive portfolio of brands, including \"Victoria's Secret\" and \"PINK,\" creates differentiation and reduces competition. The company operates over 1200 stores worldwide and is expanding its digital sales. Victoria's Secret has faced challenges in recent years, including a decrease in net sales and operating income. The company has significant long-term debt, which could pose cash flow issues in the future. Despite these challenges, Victoria's Secret has a three-pillar strategy focused on strengthening core products, international growth, and transformation. The stock is currently trading at a low valuation, presenting a potential value play. However, the company faces risks related to macroeconomic conditions, brand image, execution of acquisitions, and debt burden. From an ESG perspective, Victoria's Secret has a positive outlook.

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SE's stock has seen a nearly 35% decrease since announcing earnings on May 18th. Despite this, the company reported satisfactory earnings, marking its second consecutive profitable quarter. Shopee, SE's e-commerce platform, was recognized as the top player in Southeast Asia for 2022, holding approximately 48% market share and $47.9 billion of the region's $99.5 billion e-commerce Gross Merchandise Volume (GMV). The company is ahead of Alibaba's Lazada in all Southeast Asian countries. There is the potential for significant upside and a possible re-rating of SE's stock once their Garena game stabilizes.

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Diageo, the global leader in spirits, has a bullish outlook with forecasts indicating a total return of 56% (16.3% annualized) by June 2026. Despite a potential over-earning in CY22 due to COVID-19's demand boost and a possible future impact of a U.S. recession, the company's long-term growth drivers are deemed strong. The company's focus on premium brands and resilience in the U.S. market are key factors in this positive outlook. The growth in spirits consumption during the pandemic is believed to be permanent, supporting Diageo's growth strategy. Despite the share price remaining relatively flat since January 2020, the valuation of Diageo shares is considered cheap with a P/E ratio of 20.4x CY22 EPS and a 2.5% Free Cash Flow (FCF) Yield. The company is targeting consistent organic net sales growth and sustainable organic EBIT growth. Although a U.S. recession is inevitable, it's currently not a factor affecting the company's strong position. The company's resilience in a future recession is backed by the structural drivers behind Diageo's earnings growth and the company's diversification and better inventory control.

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