June Investment Portfolio Review
Portfolio Return: These are my returns after adopting most of Saul’s growth strategies.
2017 29.3%
2018 13.1%
2019 50.1%
2020 177.8%
2021 25.7%
2022 -60.3%
2023 17.6%
Year to Date Return
Stock Criteria:
1. Revenue Growth Over 50% Market leading products or services.
2. Increasing Margins
3. Increasing free cash flow and profitability.
4. Management with high integrity (not a fan of Musk)
5. Scalable businesses.
6. Large Total Addressable Market.
7. Reasonably Stable Share Count.
Comments on Companies
Nvidia (146.6% YTD): NVDA just keeps humming along. Revenue up 262% YOY. Non-GAAP earnings up 461% YOY. Blackwell, the next gen AI is in full production. And a small, 0.01 dividend is paid (up 150% YOY). It’s surreal owning this stock, but I don’t see an end to their growth in site, so I will stay the course. This is a strong conviction, stable company. Ordinarily, I would add to it, but it’s already above the 15% maximum for me, where I won’t add additional money, but I have qualms holding 19.21% in my portfolio.
Mercadolibre (10.8% YTD) : Mercadolibre is continuing to gain commerce share against competitors in Brazil, and is beginning to work past tax losses and currency losses that plagued them earlier in the year. Brazil implemented a 20% tax on low-cost items crossing its boarders, which will affect Temu and curtail their competition. They have made a decision to stay away from high risk credit cohorts in Brazil. Overall, they seem to be doing their typical solid business practices and I expect further recovery of its valuation over the coming months. It’s prices at a forward PE of 31 and EPS expected to grow 51%. This is a strong conviction, stable company. Ordinarily, I would add to it, but it’s already above the 15% maximum for me, where I won’t add additional money, but I have qualms holding 17.1% in my portfolio.
Nu Holdings (69.8% YTD): 69% revenue growth. QoQ customer growth remains strong at 5.8%. Deposits growing at 58%. Average cost to serve cusomers constant at 0.9$. Secured loans are increasing to 20-25%, so risk adjusted returns will improve. AI and economics of scale are improving Nu’s balance sheet. Personal, secured loans are now outpacing credit card growth. I increased my holding significantly following the earnings announcement in May.
e.l.f. Beauty (40.7% YTD): Revenues up over 77%. They gained market share for a fifth consecutive year. Gross margins are up to 71%. Adjusted earnings up 93%. They continue to beat estimates. Elf has 75% brand awareness and 20% brand loyalty. Brand awareness is about the same as Este Lauder’s. Elf opened a sales office in London. It’s growing in Italy, France, Saudi Arabia and Australia.
Monday (28.1% YTD): Monday has a 110% net retention rate. It’s revenue grew by 34% (underwhelming), but they have a rolling price increase, people seem to be sticking with them, and CRM and developer software has only recently been introduced. Monday’s non-GAAP operating income was $0.61 compared to $0.14 a year earlier. I’m in a wait and see mode for Monday.
Celsius Holdings (3.1% YTD): Celsius remains a wait and see stock for me. I am waiting to see how overseas sales and how improved shelf resets will affect business. My goodness the wailing and gnashing of teeth over slight changes in market share are beyond the pale. The energy drink market share is a fight between Monster, Red Bull, Celsius, and several upstarts. Marketers have all sorts of trick, BUT Celsius now or will soon have the best shelf presence it’s ever had and great international expansion. Still, profits are up 60% yoy, earnings per share are up 108%, and revenue is up 37%. Revenue is lower than expected but it is most likely due to Pepsi inventory adjustments. I am happy to hold and remain optimistic for increased growth in the near future.
TransMedics (8.7% YTD): I replaced Samsara with Transmedics on 6/20 because of consistent earnings beats, best-in-class technology to keep organs alive, best in class organ distribution system, and a gross margin of 62%. If the next earnings report continues the trend, I would increase my allocation to 15%.
Samsara (-13.2% YTD): I exited this position 6/20. I still like Samsara, and I am glad to see them posting new technical developments (finally). I am concerned that the growth hasn’t been as robust as I would like, there’s be quite a few insider sales, and I think several strong competitors may pop up in the near future. I think competitors would stunt Samsara’s growth. After discussing Transmedics with Stocknovice, I became convinced that Transmedics is currently a significantly stronger business that Samsara.
Best,
bulwnkl