For paid subscribers, each Stock Analysis goes a step further by opening up the full reasoning behind the investment thesis and decision process:

• Detailed TSR calculations, including all underlying assumptions. This allows investors to understand what must go right for the investment to deliver acceptable returns and to stress-test their own expectations against explicit inputs

• Explicit bull and bear cases. It helps frame both upside potential and downside risks, making uncertainties visible rather than implicit and supporting more balanced, risk-aware decisions

• My analysis beyond the overall verdict. This provides a deeper insight, enabling investors to form an independent view rather than relying solely on a conclusion

For this 6th episode, it is time to analyze OTC Markets. While the “OTC” label often conjures images of speculative “penny stocks” and dark pools, the company itself operates with the capital efficiency of a high-end software firm. OTC Markets has quietly built a formidable, asset-light monopoly, acting as the essential gatekeeper and primary information highway for thousands of companies that sit outside the NYSE and Nasdaq ecosystem. As it expands into overnight trading and high-value data analytics, the challenge for investors is determining if this hidden small-cap gem can sustain its elite returns as it scales into the spotlight of the broader market.

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The stock at a glance

The business model

OTC Markets operates a classic “toll-bridge” business model, characterized by an enviable level of capital efficiency and a dominant competitive position within a specialized niche of the financial ecosystem. At its core, the company functions as a private regulator and information hub, providing the essential infrastructure that allows decentralized trading to occur across three distinct tiers: the OTCQX (the premium tier for established, high-disclosure international blue chips), OTCQB (the venture stage for developing companies with reporting standards) and Pink markets (the speculative, entry-level tier with no financial requirements). Unlike traditional exchanges that rely on physical trading floors or massive capital outlays, OTC Markets leverages an asset-light, technology-driven framework that generates high-margin, recurring revenue.

The brilliance of the model lies in its triple revenue stream, where the company captures value at every stage of a stock’s lifecycle. It charges corporate issuers annual fees for the prestige and visibility of being listed on its premium tiers, sells real-time market data to brokers and financial institutions who require transparency and provides the OTC Link technology that enables broker-dealers to execute trades. This creates a powerful network effect. As more companies join the platform to seek liquidity, the data becomes more valuable and the trading infrastructure becomes more indispensable.

Because the cost of adding a new subscriber or listing a new company to a digital platform is virtually zero, the company enjoys immense operating leverage. This allows OTC Markets to convert a significant portion of every marginal dollar of revenue directly into free cash flow. By avoiding the heavy regulatory and capital burdens of a National Securities Exchange status while maintaining a de facto monopoly over its segment, the business produces the elite return on invested capital that has become the hallmark of its investment profile. It is, in essence, a high-software-margin business disguised as a legacy financial utility, sitting at the intersection of regulatory necessity and technological scalability.

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For paid subscribers, each Stock Analysis goes a step further by opening up the full reasoning behind the investment thesis and decision process:

• Detailed TSR calculations, including all underlying assumptions. This allows investors to understand what must go right for the investment to deliver acceptable returns and to stress-test their own expectations against explicit inputs

• Explicit bull and bear cases. It helps frame both upside potential and downside risks, making uncertainties visible rather than implicit and supporting more balanced, risk-aware decisions

• My analysis beyond the overall verdict. This provides a deeper insight, enabling investors to form an independent view rather than relying solely on a conclusion

For this 5th episode, it is time to analyze Schneider Electric, a company that has masterfully shed its skin as a legacy industrial player to emerge as a leader of the digital age. Long perceived as a cyclical manufacturer of circuit breakers and switchgear, Schneider has engineered a structural transformation into a high-margin, software-integrated titan. Today, it stands as a critical picks-and-shovels play for the AI-driven data center boom (a sector now representing nearly 30% of its business) while simultaneously riding the secular tailwinds of global decarbonization. The question for investors in 2026 is no longer about the business’s quality, but whether its increasing profitability can finally outpace its premium valuation.

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The stock at a glance

The business model

Schneider operates through a tiered sales model that moves from simple hardware to complex systems and recurring software.

• Products (48%). This is the foundation, the boring electrical components. While it is the largest revenue slice, it serves as the entry point for the customer relationship

• Systems (33%). This represents integrated infrastructure, such as full data center power architectures or smart grid setups

• Software & Services (19%). This is the high-margin crown jewel. It includes the AVEVA and ETAP platforms. This segment is critical because it turns a one-off sale into a long-term, sticky relationship

The “Digital Flywheel” is Schneider’s internal metric for its digital transformation. It tracks the percentage of revenue derived from Connectable Products, Edge Control and Software/Services. It has grown from 53% in 2022 to 60% by H1 2025. The flywheel creates a feedback loop: more connected products lead to more data, which requires more software to manage, which in turn justifies more services. This is why EBITDA has grown at an 11% CAGR, significantly faster than Revenues (7% CAGR).

Schneider’s end-market exposure is perfectly aligned with current 2026 tailwinds:

• Data Center & Networks (29%). This is the primary growth engine. Through acquisitions like Motivair (liquid cooling), Schneider provides the entire physical layer for AI factories

• Buildings (30%). Focuses on energy efficiency and decarbonization (retrofitting old buildings to meet modern ESG standards)

• Industry & Infrastructure (41%). Focuses on smart manufacturing and the electrification of the grid

Schneider’s geographic diversification provides a resilient floor against localized economic volatility. However, with the revenue growth increasingly concentrated on Data Centers, the company has exposed itself to a risk: any cooling in AI infrastructure spending would disproportionately weigh on the group’s growth trajectory.

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The Microsoft case study

For those who have followed my journey, Microsoft serves as a textbook example of my framework in action. I have been a long-term shareholder, consistently adding to my position whenever the market presented a Quality discount.

However, during the peak of the AI frenzy, when Microsoft cleared $500 and sentiment was ultra-positive, I refused to move.

Buying during an overextension phase is a recipe for dead money: it can take years for the underlying business to grow into an inflated valuation. At the time, I publicly stated my next buy zone was $350. The pushback was immediate: “It’s absolutely stupid,” critics said. “Microsoft will never see $350 again”

My thesis was simple:

• Capex reality. Shifting from an asset-light software model to an asset-heavy AI infrastructure model must weigh on the PE multiple

• Market symmetry. A bullish excess is almost always corrected by a bearish excess

To be clear, my discipline was not a reflection of declining confidence in Microsoft’s fundamentals. It was a rejection of the Quality at Any Price fallacy. Even the best company becomes a poor investment if you pay the wrong multiple.

I stuck to the plan. Today, Microsoft is knocking on the door of that $350 level.

The irony? The same voices that called it a must buy at $500 are now claiming $350 is too risky. This is the noise I ignore. My strategy remains unchanged: Identify quality, define the buy zone and deploy capital with discipline. Everything else is just a distraction.

Going back to Alphabet: my history with the stock

My relationship with Alphabet has always been defined by discipline rather than emotion

• The $100 entry. I first built my core position in the wake of the post-COVID period

• The $150 accumulation. I highlighted several times that $150 represented a massive buy zone. At that level, the PE was near 17x, even as the consensus claimed that Google Search is dead. I ignored the noise and bought the fear, focusing on the obvious intrinsic value. This was around April 2025. My exact entry was closer to $160, but the thesis remains the same

• The $300 trim. In early 2026, as Alphabet cleared $300 and surged toward its ATH of $350, the valuation became detached from historical norms. The technical setup looked exhausted and because the position had grown to be an outsized portion of my portfolio, I decided to trim. It remains one of my largest holdings, but discipline required taking some chips off the table

Alphabet remains a world-class business. To win the AI war, Alphabet is entering an era of unprecedented CAPEX (capital expenditure).

Management recently signaled a 2026 Capex plan of $175B–$185B. While this secures their lead, it creates a massive drag on FCF. In my Quality framework, I don’t just look at revenue, I look at the cost of that revenue. When Capex explodes, the PE multiple should compress to reflect the lower cash conversion.

Additionally, the AI tide is beginning to recede. This is not a critique of the long-term trend, but rather a recognition that every innovation cycle begins with a peak of inflated expectations. As we move toward the trough of disillusionment, the market often needs to see blood in the streets before a true bottom is formed. Macroeconomic conditions are not great either: several reasons to be cautious.

Alphabet remains one of the most interesting companies in the world.

The technical situation

Technically, Alphabet’s chart over the last 12 months looks like a classic overextended bell curve. We saw a parabolic move from $150 to $350 fueled by momentum, not just fundamentals.

What is next?

In the final section of this article, I reveal my specific strategy for Alphabet and my buy zones. We will move beyond the theory and apply the Quality Stocks Investment Framework to current prices. If you want to see exactly how I manage risk and identify entry points in real-time, the rest of this article provides the definitive blueprint.

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For paid subscribers, each Stock Analysis goes a step further by opening up the full reasoning behind the investment thesis and decision process:

• Detailed TSR calculations, including all underlying assumptions. This allows investors to understand what must go right for the investment to deliver acceptable returns and to stress-test their own expectations against explicit inputs

• Explicit bull and bear cases. It helps frame both upside potential and downside risks, making uncertainties visible rather than implicit and supporting more balanced, risk-aware decisions

• My analysis beyond the overall verdict. This provides a deeper insight, enabling investors to form an independent view rather than relying solely on a conclusion

For this 4th episode, it is time to analyze Deckers Outdoor. Despite maintaining world-class capital efficiency and a fortress balance sheet, Deckers Outdoor is currently trading 50% below its ATH dropping from 30x PE to 15x. This disconnect between fundamental quality and share price performance raises critical questions. Is the core business model under threat or has the market created a rare entry point? In this analysis, we deconstruct the 15x PE to determine if Deckers Outdoor is a value trap or the bargain of 2026.

Previous stock analyses

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The stock at a glance

The business model

The Deckers Outdoor business model is built on a brand-builder strategy that prioritizes high-performance niches and premium pricing. At its core, the company operates a 2-engine portfolio where Hoka serves as the aggressive growth vehicle while UGG acts as the highly profitable anchor.

By positioning Hoka as a maximalist footwear leader for serious athletes and UGG as a premier lifestyle comfort brand, Deckers successfully captures 2 distinct consumer segments.

Central to this model is a disciplined omnichannel distribution strategy that carefully balances wholesale partnerships with a Direct-to-Consumer (DTC) platform (higher margin and direct customer relations). This control over the customer journey is a primary reason why the company can sustain industry-leading gross margins (around 60%), as it effectively bypasses the need for heavy promotional discounting.

Financially, Deckers operates an asset-light manufacturing model, outsourcing the vast majority of its production to third-party partners in Southeast Asia (like most of the textile / sportwear / footwear industry). This structure minimizes capital expenditures and allows the company to remain incredibly agile, redirecting cash flow toward research, development and aggressive share buybacks. This capital efficiency has resulted in a fortress-like balance sheet characterized by zero debt and a multi-billion dollar cash reserve. While this reliance on global sourcing currently faces headwinds from shifting trade policies and tariffs, the inherent flexibility of the model allows Deckers to pivot its supply chain rapidly if necessary.

6 reasons of the decline

Here are for me the 6 primary reasons explaining the decline of Deckers Outdoor stock price, despite huge qualities:

• Growth slowdown and normalization. After years of breakneck expansion where revenues regularly surged over 20%, the company has entered a normalization phase. By March 2026, growth has cooled to a high single-digit range. While these are healthy numbers for a mature business, the shift has forced momentum investors (who previously paid a premium for hyper-growth) to exit the stock, leading to a significant valuation reset

• Persistent margin pressure. The company is facing a storm of rising costs. Heavy reliance on Vietnamese manufacturing has made Deckers a prime target for the tariff hikes (estimated costs around $185M). When combined with fluctuating ocean freight rates and higher costs for premium raw materials like sheepskin and specialized foams, the gross margin is under pressure

• Macroeconomic uncertainty. As a premium discretionary brand, Deckers is highly sensitive to the wealth effect. With high interest rates and wavering consumer confidence in early 2026, many investors fear a pullback in luxury and performance spending. While Hoka remains a staple for runners, the market is pricing in a safety margin in case the broader footwear category sees a sharp decline (especially in the US - 2/3 of the sales)

• Increasing competition. The footwear space is no longer a one-horse race. Competitors like On Holding have captured the cultural hype spotlight, while legacy giants like Nike and New Balance have successfully launched their own comfort-focused lines. As Hoka becomes more ubiquitous in suburban malls, it risks losing the scarcity premium that previously allowed for minimal discounting and high exclusivity

• Valuation normalization after overburn. In 2024, the stock entered a period of speculative overburn, where the PE ratio climbed above 30x. The current 50% drop from those ATH is, in many ways, a healthy correction (maybe severe but still healthy)

• Strategic shift toward more wholesale distribution. Under new leadership, there has been a noticeable pivot toward expanding the wholesale footprint in stores like REI and Nordstrom to drive volume. While this moves more units, it creates structural pressure on gross margins because wholesale sales are less profitable than DTC transactions. Investors are concerned that this shift might dilute the brand’s elite status and permanently lower the company’s earnings power

To go beyond the initial analysis, paid subscribers unlock the detailed TSR calculation with underlying assumptions, explicit bull and bear cases and my full analysis beyond the verdict, providing deeper insight into risks, opportunities and the investment decision process

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For paid subscribers, each Stock Analysis goes a step further by opening up the full reasoning behind the investment thesis and decision process:

• Detailed TSR calculations, including all underlying assumptions. This allows investors to understand what must go right for the investment to deliver acceptable returns and to stress-test their own expectations against explicit inputs

• Explicit bull and bear cases. It helps frame both upside potential and downside risks, making uncertainties visible rather than implicit and supporting more balanced, risk-aware decisions

• My analysis beyond the overall verdict. This provides a deeper insight, enabling investors to form an independent view rather than relying solely on a conclusion

For this 4th episode, it is time to analyze Lululemon. The company has become a lightning rod for debate, with 2 distinct camps of investors emerging: those who believe the athleisure pioneer has lost its edge to rising competition and US consumer fatigue and those who see a massive growth story being fueled by explosive international expansion (especially in China). With the recent CEO transition and tariff headwinds, the stock's PE has compressed to roughly 15x, a staggering departure from its historical averages. Despite revenues more than tripling since 2019, the market cap has effectively reset to pre-pandemic levels. Let’s dive in!

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The stock at a glance

The business model

Lululemon’s product ecosystem is defined by a philosophy that prioritizes proprietary textile engineering. At its core, the brand is anchored by foundational performance fabrics that have become industry benchmarks, such as the weightless, buttery-soft Nulu used in the iconic Align yoga series and the high-compression, cool-to-touch Everlux designed for high-intensity training. These materials are patented technologies that create a physical habituation in the wearer increasing brand loyalty.

By 2026, this expertise has expanded into innovations like ShowZero, a yarn-level technology that prevents fabric from darkening when wet, effectively making sweat invisible.

Beyond its origins in Yoga, the brand has successfully expanded into Run and Train, offering high-performance technical gear for marathons and high-intensity workouts, alongside specialized Play categories like Golf, Tennis, and Hike.

Unlike competitors like Nike or Adidas, who historically relied on wholesale partners, Lululemon operates a Vertical Direct-to-Consumer (DTC) model. By controlling nearly 100% of its distribution through its own stores and an e-commerce platform, the company captures the full retail margin. This allows for industry-leading gross margins (consistently above 50%) and, more importantly, total control over pricing and brand data.

Lululemon famously bypasses traditional multi-million dollar celebrity ad campaigns in favor of a Community Ambassador Program. They partner with local micro-influencers (like yoga teachers, CrossFit coaches or run club leaders) providing them with gear in exchange for hosting in-store classes and providing product feedback. A low-cost, high-trust, word-of-mouth growth method.

The current strategic plan is called “Power of three x2”. It is a 5-year strategic roadmap designed to double the company’s 2021 revenue to $12.5B by the end of 2026 (the actual 2026 revenue will be closer to $11B). Building on the success of the original "Power of Three" pla (which the company achieved 2 years ahead of schedule) this updated strategy focuses on three key pillars: product innovation, guest experience and market expansion. Specifically, the plan targets doubling the men’s business, doubling digital revenues and quadrupling international sales relative to 2021 levels.

The recent performance reveals a stark geographic divide, where an explosive 33% surge in international revenue (driven by a nearly 46% jump in Mainland China) is effectively subsidizing the top line as the company’s core Americas segment faces a 2% decline amid rising competition and stagnant US consumer demand.

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The metrics alone tell a story that most investors simply don’t believe until they see the reports:

• >25% revenue growth in 2025. While most industrial and healthcare peers struggled with a challenging market and currency effect, this company saw a surge in its revenue

• 82% gross margin & 30% ROIC. These are Silicon Valley software levels of efficiency but generated by a physical medical device company with a 40-year history

• 70% recurring revenue. This is a razor & blade masterpiece. Once the hardware is installed, the company collects a high-margin revenue for every use of its product

• A fortress balance sheet. The company operates with a strong net positive cash position, even after paying out a healthy & growing dividend

• Valuation reset. Despite the growth, the stock is currently trading at a 2026 Forward PE of roughly 25x, a compelling entry point for a monopoly-status compounder

The business model is its greatest moat. It operates in the defensive healthcare sector, making it recession-resistant. It holds a near 90% market share in Japan and Germany, yet remains virtually unknown to the average retail investor. Overall, it holds 37% of the global market, while its closest competitor is far behind at just 8%.

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Finding a high-quality compounder at a fair price is rare. I have spent hours dissecting this company’s filings to ensure it meets the strict criteria of my Quality Stocks Investment Framework. I am genuinely excited to share this one, it is a textbook hidden monopoly that the broader market is currently mispricing.

Unlock the full report to access:

• The ticker & one-pager. The name of this European beast and a high-impact summary you can digest in 60 seconds featuring all the relevant data

• The business model. A deep dive into the business model and the company’s unique value proposition

• The decision framework. The score (growth, quality, valuation), my specific buy zone, fair price and the expected Total Shareholder Return (TSR) over the coming years

• The bull vs. bear case. A balanced look at the risks, providing you with a 360° view before you invest

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For paid subscribers, each Stock Analysis goes a step further by opening up the full reasoning behind the investment thesis and decision process:

• Detailed TSR calculations, including all underlying assumptions. This allows investors to understand what must go right for the investment to deliver acceptable returns and to stress-test their own expectations against explicit inputs

• Explicit bull and bear cases. It helps frame both upside potential and downside risks, making uncertainties visible rather than implicit and supporting more balanced, risk-aware decisions

• My analysis beyond the overall verdict. This provides a deeper insight, enabling investors to form an independent view rather than relying solely on a conclusion

For this 3rd episode, it is time to analyze Adobe. The company has been drawing significant attention recently, with 2 camps of investors emerging: those who fear that AI could disrupt Adobe’s business and those who believe the company is well positioned to monetize AI. With a PE of 16x, valuation is close to all-time low. Let’s dive in.

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The stock at a glance

The business model

Adobe organizes its business into 3 core revenue segments that reflect how it sells products and services to customer:

• Digital Media. This is Adobe’s largest segment (3/4 of sales) and includes subscription revenue from products focused on creative work and document workflows. Creative Cloud: Core creative tools such as Photoshop, Illustrator, Premiere Pro, Lightroom and Adobe Express. Document Cloud: PDF, e-signatures, Acrobat and workflow tools for creating, editing, sharing and signing documents. This segment generates the majority of Adobe’s revenue

• Digital Experience (Experience Cloud). This segment focuses on enterprise customers. It includes tools that help businesses manage customer experiences, personalization, analytics, content and digital marketing at scale. Products include Adobe Experience Manager (AEM), Adobe Analytics or Adobe Target

• Publishing and Advertising. Historically smaller, this segment includes legacy products and services oriented toward publishing workflows, advertising technology and certain specialized tools

This slide clearly shows the 3 main audiences of the company: business professionals & consumers, creators & creative professionals and market professionals.

Adobe and AI

Adobe’s AI strategy is built as a full-stack platform that embeds AI directly into its core products, from Creative Cloud and Firefly to Acrobat and Experience Cloud. Adobe combines its own Firefly generation and editing models with partner models, layers them with agent-based and conversational interfaces and grounds everything in structured data. This is the long-term vision but execution is still ongoing and the platform continues to evolve (and improve).

This strategy is highly relevant for AI monetization because Adobe can charge for AI as productivity and workflow value, not just usage. AI features drive higher subscription tiers, add-on pricing and increased seat adoption, while enterprise customers are willing to pay for integrated AI at scale.

AI does increase competitive risk for Adobe. On the risk side, generative AI dramatically lowers the barrier to entry for creative tools. New players can build fast, cheap, AI-first products for specific use cases (images, video, social content) without decades of development. This puts pressure on Adobe at the low end of the market, especially among casual users and small creators who may accept basic and simpler outputs and switch more easily.

However, Adobe’s defensive position is strong. Professional creators, enterprises and marketing teams rely on specific and deep functionality and workflow integration. Adobe is also an ecosystem with collaboration tools so switching costs remain.

Higher productivity could reduce the number of seats over time, but this should be offset by AI monetization through usage-based or credit (ticket) systems, ultimately lifting revenue per seat. As a result, I do not view AI as the threat the market currently seems to fear. That said, as always, it remains important to stay cautious and monitor concrete signals that could indicate a genuine shift in risk.

To go beyond the initial analysis, paid subscribers unlock the detailed TSR calculation with underlying assumptions, explicit bull and bear cases and my full analysis beyond the verdict, providing deeper insight into risks, opportunities and the investment decision process

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For paid subscribers, each Stock Analysis goes a step further by opening up the full reasoning behind the investment thesis and decision process:

• Detailed TSR calculations, including all underlying assumptions. This allows investors to understand what must go right for the investment to deliver acceptable returns and to stress-test their own expectations against explicit inputs

• Explicit bull and bear cases. It helps frame both upside potential and downside risks, making uncertainties visible rather than implicit and supporting more balanced, risk-aware decisions

• My analysis beyond the overall verdict. This provides a deeper insight, enabling investors to form an independent view rather than relying solely on a conclusion

For this 2nd episode, we turn to Rollins, a US-based services company and a global leader in pest control and termite management solutions for residential and commercial customers.

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The stock at a glance

The business model

Rollins’ business model is based on recurring, contract-driven pest control services, primarily delivered through its flagship Orkin brand. The company provides ongoing residential and commercial pest management through regularly scheduled service plans, which generate predictable revenue, high customer retention and stable cash flows.

Recurring revenue is a key driver of Rollins’ success because it provides predictable cash flows, high customer retention and operational efficiency. Ongoing service contracts ensure regular customer interactions, reduce churn and lower customer acquisition costs, while allowing Rollins to optimize technician routes and pricing over time. This stability enables consistent reinvestment (M&A, technology, marketing, …), reinforcing market share gains and creating a resilient growing business model largely insulated from economic cycles.

The second key driver of Rollins’ success is its disciplined and repeatable M&A strategy. Operating in a highly fragmented industry, Rollins regularly acquires small, local pest-control operators and integrates them onto its national platform, benefiting from brand strength, purchasing power and operational efficiency. These acquisitions are typically low risk, quickly accretive and reinforce local density, allowing Rollins to steadily expand its footprint, gain market share and compound growth without relying on large, transformational deals. A great element for a serial-acquirer.

Last earnings report

The company earned $1.03B in revenue in its Q3 25, which was 12% higher than the same quarter last year. Organic growth accounted for 7.2% of that increase while the rest came from acquisitions.

EPS were $0.34 (on a GAAP basis), up 21% YoY . Cash flow from operations increased 30% to $191M. All three main business segments performed well

• Residential pest control revenue grew 11.2%

• Commercial pest control rose 11.8%

• Termite and ancillary services increased 15.2%

Margins also improved, with the adjusted EBITDA margin rising to 25.2% (+120bps vs previous year). Management noted strong demand and successful integration of acquisitions.

To go beyond the initial analysis, paid subscribers unlock the detailed TSR calculation with underlying assumptions, explicit bull and bear cases and my full analysis beyond the verdict, providing deeper insight into risks, opportunities and the investment decision process

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For paid subscribers, each Stock Analysis goes a step further by opening up the full reasoning behind the investment thesis and decision process:

• Detailed TSR calculations, including all underlying assumptions. This allows investors to understand what must go right for the investment to deliver acceptable returns and to stress-test their own expectations against explicit inputs

• Explicit bull and bear cases. It helps frame both upside potential and downside risks, making uncertainties visible rather than implicit and supporting more balanced, risk-aware decisions

• My analysis beyond the overall verdict. This provides a deeper insight, enabling investors to form an independent view rather than relying solely on a conclusion

For this 1st episode, we turn to Nemetschek, a German software company and a global leader in digital solutions for architects, engineers, and construction professionals.

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The stock at a glance

The business model

Nemetschek makes money by selling software solutions to architects, engineers, construction companies and media designers, covering the entire lifecycle of a building or infrastructure project, from design and planning to construction and operation. The group operates through multiple specialized brands (such as Allplan, Graphisoft, Vectorworks, Solibri, and Bluebeam), each focused on a specific professional niche.

Revenue is generated primarily through software licenses and subscriptions, with a growing share coming from recurring subscription fees, maintenance contracts and cloud-based services. This diversified, brand-led structure allows Nemetschek to address different customer segments while keeping strong local market positions and high switching costs.

Over the past years, Nemetschek has been actively transitioning from perpetual licenses to a subscription-based model, which improves revenue visibility, customer lifetime value and cash flow predictability. Subscription and SaaS revenues now account for a steadily increasing share of total sales, supporting structural margin expansion as scale effects and pricing power kick in. In addition, Nemetschek monetizes its large installed base through upgrades, cross-selling and complementary services. The result is a business model built on recurring revenue, sticky customers and long-term compounding.

Nemetschek benefits from powerful structural tailwinds, led by the ongoing digitalization of the architecture, engineering and construction (AEC) industry, which remains underpenetrated by software.

Last earnings report

In its Q3 2025 report, Nemetschek reported robust growth with revenues reaching 293.1M€, representing a 15.8% growth YoY. This performance was primarily fueled by a significant 46% surge in subscription and SaaS revenues to 211.1M€. ARR grew 26.4% to 1,077M€. EPS grew faster (+40%) due to margin increase to 0.48€.

The company reaffirmed its upgraded FY 2025 guidance, anticipating revenue growth of 20% - 22% and an EBITDA margin around 31%.

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Yet beneath the market’s surface, the picture is more complex and perhaps more promising. Many of these companies still generate robust cash flows, maintain sticky customer bases, and hold strategic advantages in data, analytics, and recurring revenue. The market’s correction also offers more reasonable valuations.

For long-term investors, that could represent an opportunity. Let’s see why!

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The information services industry

The Information Services industry sits at the intersection of technology, data, and business intelligence. It encompasses companies that collect, process, analyze, and distribute information, helping organizations make better decisions, manage risk, and operate more efficiently. These firms do not create physical products: instead, their core asset is information itself (structured, organized, and delivered as a service).

The industry includes a wide range of business models:

• Market and financial data providers such as Bloomberg, or FactSet, which supply analytics and intelligence to financial institutions

• Credit and risk information companies like Experian, Equifax, and Dun & Bradstreet, which enable credit assessments, identity verification, and compliance

• Business intelligence and analytics platforms, from Gartner’s research and advisory services to emerging digital data marketplaces that help firms make data-driven decisions

• Professional and academic information specialists such as RELX and Wolters Kluwer, which serve legal, regulatory, healthcare, and scientific markets with indispensable data, analytics, and workflow tools

• Subscription-based digital services offering specialized data or insights across verticals, including healthcare, logistics, and cybersecurity

Despite their diversity, these companies share a common economic DNA: recurring revenue, high switching costs, and strong operating leverage once data assets are built. Their products are deeply embedded in clients’ workflows, making them relatively defensive in most economic cycles. Historically, this has made the sector attractive for investors seeking stable, high-margin growth until recent market shifts challenged that perception.

For a more detailed analysis, you can read my deep dives on RELX or Globaldata

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The current situation of the main actors

Here are the main actors of this industry in the stock market and their current situation.

As we can see, these companies are currently navigating a very challenging phase. Although there are differences in their individual situations, they are all broadly experiencing a cooling period after several years of exceptional performance.

For context, Wolters Kluwer was previously part of my portfolio. I sold the position in August 2024, at around 150€ per share, after concluding that its expected total shareholder return over the next decade would likely be too modest, despite the company’s undeniable strengths. Following that sale, the stock continued its bullish momentum and reached approximately 180€, before eventually correcting sharply to around 96€ today.

You can’t perfectly time the market, but you can recognize excess when it appears and act with discipline when fundamentals no longer justify valuations.

The main reason for the fall

While several factors have contributed to the recent downturn, the rise of AI stands out as the most decisive. What was initially perceived as a tailwind for data-rich companies has, paradoxically, become a source of uncertainty and fear among investors.

Information services firms have long thrived on their ability to transform complex, proprietary data into structured insights. Their competitive edge rests on data quality, curation, and domain expertise, factors that justify premium pricing and high client retention. However, the explosion of generative AI and large language models has blurred the line between publicly available information and proprietary content. Investors worry that if AI systems can generate research summaries, legal templates, or even risk analyses instantly and at near-zero cost, the market may begin to undervalue the depth and uniqueness of these companies’ offerings.

At the same time, integrating AI into legacy workflows is not free. Companies are investing heavily in AI infrastructure, data labeling, and model integration, which temporarily weighs on margins. RELX, for example, has ramped up spending on machine learning to enhance LexisNexis and ScienceDirect, while Wolters Kluwer is deploying AI to automate legal and medical research tools. These initiatives should strengthen their long-term competitiveness but create short-term profitability headwinds.

The narrative power of AI itself cannot be underestimated. Every technological revolution sparks exaggeration and the current one is no exception. In the minds of many investors, AI represents a classic case of creative destruction: a force that will reshape industries faster than incumbents can adapt. Even if that scenario proves overstated, perception alone has real effects on stock valuations. When a market begins to price in the possibility of disintermediation, multiples compress quickly, often well before fundamentals show any real deterioration.

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The hidden reason: valuation

Beyond the AI narrative, part of the sector’s decline simply reflects a long-overdue valuation correction. For years, information services companies traded at ever-higher multiples, supported by their stability, digital transition, and reputation as quality compounders.

However, as growth began to normalize and future returns looked more modest, those lofty valuations became harder to defend. When AI arrived on the scene, it did not just challenge the business model narrative, it also exposed the gap between price and growth potential.

My view

My point of view is that information services companies are, in many ways, better positioned than most to benefit from AI. They own structured, verified, and legally protected datasets, precisely the kind of content AI systems need to function effectively. Over time, those with strong proprietary data and trusted brands may find themselves licensing their content to AI developers or embedding AI deeper into their own tools, enhancing productivity and client value.

In other words, the market may be overreacting in the short term to a long-term catalyst. AI is likely to reshape the industry, not replace it.

Buy zones for my 4 favorite stocks in the industry

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But Eurofins is more than just a defensive play. Behind its essential services lies a robust growth engine. With a network of over 900 laboratories in more than 50 countries, the company has scaled efficiently through a blend of organic expansion and strategic acquisitions, building a decentralized but synergistic global platform.

This article examines what sets Eurofins apart. I will also outline the key risks and opportunities, provide my fair value estimate and highlight potential buy zones for investors who may find the stock appealing.

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Company overview

Eurofins is structured into 4 strategic business units (Life, Biopharma, Diagnostic Services & Products, and Consumer & Technology Products Testing) each delivering testing and analysis services across industries.

1. Life (41% of revenue)

The life business unit is dedicated to safety, quality and sustainability in food, agricultural, and environmental domains. It conducts analytical testing on food and feed products to detect contaminants, allergens, and verify nutritional content. In agriculture, Eurofins supports crop and soil analysis, promoting sustainable farming practices and protecting food supply chains. Environmental testing services span air, water, and soil analysis, enabling clients to monitor pollution levels and comply with environmental regulations.

2. Biopharma (29% of revenue)

The biopharma unit serves pharmaceutical and biotechnology companies by offering comprehensive laboratory services that support the entire drug development lifecycle. From discovery and preclinical research to clinical trials and manufacturing quality control, Eurofins provides expertise in chemistry, microbiology, formulation, and stability testing. The unit also covers agroscience testing and offers specialized genomics and forensic services. With its deep scientific knowledge and regulatory expertise, this division plays a crucial role in helping clients bring safe, effective therapeutics to market efficiently.

3. Diagnostic services & product (20% of revenue)

Diagnostic services & products is Eurofins’ contribution to clinical and medical testing. This business unit develops and delivers advanced diagnostic solutions, including molecular diagnostics, and laboratory-developed tests in areas such as hormonal imbalances, autoimmune disorders, and infectious diseases. It also manufactures in-vitro diagnostic products, including instruments and assay reagents used in clinical labs and point-of-care settings. By integrating diagnostics with laboratory innovation, this segment enhances healthcare decision-making and supports better patient outcomes.

4. Consumer & technology products testing (10% of revenue)

The consumer & technology products testing unit focuses on evaluating the safety, quality, and regulatory compliance of everyday products. It tests a wide array of items (from toys and cosmetics to textiles and electronics) ensuring they meet local and international safety standards. This unit also conducts advanced material sciences testing, examining packaging properties, chemical composition, and mechanical durability.

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A serial acquirer

From its IPO in 1997, Eurofins pursued an aggressive acquisition approach starting with environmental and food safety, and later moving into pharmaceutical, genomics, diagnostics, and materials science labs.

In 2024 alone, Eurofins completed 31 acquisitions (12 in North America, 15 in Europe, and 4 across the rest of the world) aimed at strengthening its technological capabilities, expanding its service offerings, and enhancing its global footprint. In Q1 2025 Eurofins closed 11 acquisitions, adding over 160M€ in revenues.

For years, Eurofins’ rapid-fire acquisition strategy was central to its expansion, transforming it from a niche lab in France into a global testing powerhouse. This aggressive M&A spree (often involving dozens of deals annually) allowed Eurofins to quickly scale into new geographies and service lines. However, the speed and scale of these acquisitions also sparked investor concerns over the company’s rising debt burden and the sustainability of its financial structure.

By the late 2010s, Eurofins was taking on substantial leverage to fund its deal-making. The company often prioritized growth and market share over near-term profitability, leading to a spike in net debt and pressure on its balance sheet. Credit rating agencies and analysts began to flag risks around integration challenges and capital intensity.

In recent years, however, Eurofins has made deliberate moves to address these concerns. Management began shifting from a high-velocity M&A model toward a more disciplined approach, focusing on strategic bolt-on acquisitions and optimizing existing operations. As a result, the company has materially improved its leverage metrics. The current debt leverage is around 2x EBITDA (it was 3.6x in 2019, 3x being the risk threshold).

Shadows behind the business

Eurofins Scientific has increasingly come under fire for what many critics view as a pattern of questionable corporate practices, marked by financial opacity, governance entanglements, and ethical lapses. Central to the unease is the company’s apparent tendency to massage certain financial metrics, selectively emphasizing adjusted figures that paint a rosier picture of its performance than standard accounting might allow. This raises legitimate concerns that Eurofins may be presenting an overly flattering narrative to the market.

Such skepticism reached a boiling point in June 2024, when prominent short-seller Muddy Waters published a scathing report accusing Eurofins of inflating earnings and overstating cash balances. The 35-page document pointed to a web of related-party transactions involving CEO Gilles Martin, whose private holding company allegedly sold properties to Eurofins and then leased them back at above-market rents. These arrangements, the report claimed, allowed insiders to quietly extract value from the business under the guise of routine operations. The conclusion was blunt: Eurofins, according to Muddy Waters, appeared “optimized for malfeasance”.

These allegations are especially troubling in light of the company’s complex and opaque ownership structure. Although Martin owns a relatively modest economic stake, he wields significant voting power through his vehicle Analytical Bioventures, giving him effective control over Eurofins’ strategic direction. This dual-class setup limits accountability and amplifies concerns about conflicts of interest, particularly when insider transactions are involved.

The company’s operational history offers further reasons for concern. Eurofins has previously been implicated in multiple cases of data manipulation and regulatory noncompliance. In the US, employees were caught falsifying lab results and billing for services that did not meet proper standards, leading to federal investigations, legal settlements, and reputational damage. These incidents suggest a recurring failure in internal oversight and hint at a corporate culture where procedural rigor can be compromised in pursuit of growth or profit.

In sum, while Eurofins has positioned itself as a global leader in testing and laboratory services, its governance model, financial practices, and compliance record have drawn a cloud of suspicion. While such characteristics are not uncommon in family-controlled enterprises, they nonetheless represent an added layer of risk that investors must carefully weigh.

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A fragmented growing market

This chart illustrates one of the key drivers behind the company’s success: its Environmental division, a subsegment of the Life Sciences business unit. The data highlights how this sector has been expanding at a pace that consistently outstrips GDP growth, underscoring its strategic importance.

The pharmaceutical analytical testing market is projected to grow at over 9% annually through 2030. The growth of these underlying markets is fueled by tightening regulatory standards and increasing health awareness in both developed and emerging economies. As the need for rigorous testing continues to escalate, the sector remains well-positioned for sustained expansion.

Moreover, despite rapid consolidation in recent years, the market remains highly fragmented, offering ample opportunities for further acquisitions.

In the following sections, you will find detailed insights into key metrics, fair price estimation, a comprehensive SWOT analysis (strengths, weaknesses, opportunities, and risks), and precise buy zone identification. Subscribe now to unlock full access to this newsletter, including exclusive analyses, portfolio tracking, screeners and curated stock picks

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With brands like Il Makiage and SpoiledChild, Oddity is not just selling cosmetics and skincare. It is also building a vertically integrated, software-driven engine designed to identify consumer needs faster and deliver personalized products at scale. Since its IPO in 2023, the company has drawn attention from both growth investors and beauty insiders, not just for its sleek branding, but for its robust unit economics and aggressive reinvestment strategy.

But is Oddity just another trendy upstart riding a short-term wave, or is it laying the foundation for a long-term beauty empire? In this deep dive, I will break down Oddity’s business model, financial profile, market positioning, and the key risks and catalysts that could determine whether this stock has real staying power.

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Business overview

The company owns 2 major brands:

• Il Makiage. A data-driven cosmetics brand focused on complexion and color products. It is known for its AI-powered shade matching and personalized onboarding funnel

• SpoiledChild. It is a newer entry into the personal care and wellness space, offering customizable products targeting longevity, hair health, and skincare concerns. It follows the same tech-first model with adaptive algorithms guiding product recommendations

This slide, from the investor presentation deck, illustrates how Oddity’s technology platform serves as the backbone of its business today, while also pointing to its broader strategic potential. Currently, the platform powers the onboarding, growth, and retention of customers across Oddity’s core brands by combining advanced capabilities in data science, machine learning, digital marketing, and UX optimization.

Each layer of the platform plays a role:

• A massive data lake feeds insights across brands and functions

• Technology tools like hyperspectral vision, molecular discovery, and video-on-demand content create hyper-personalized consumer experiences

• The platform enables fast product iteration and targeted marketing across verticals, giving Oddity a measurable edge in customer acquisition and lifetime value

While today it supports internal brands, the architecture is built for scalability and monetization beyond DTC beauty. The slide hints at three future growth vectors:

• New Brand Launches. The platform can onboard and scale additional in-house or acquired brands (Brand 3, Brand 4)

• Partner Brands. Oddity could license its platform and infrastructure to external partners, transforming into a tech enabler

• Data Monetization. With a rich data ecosystem, Oddity can commercialize its insights across beauty, wellness, and even adjacent sectors

In short, Oddity is not just building brands, it is laying the groundwork for a platform business with multiple monetization layers. As I explained in my article on the company, L’Oreal is attempting a similar transformation. However, given its size and deep-rooted legacy, it cannot pivot as quickly and is unlikely to reach the level of technological integration that defines born-digital brands like Oddity.

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Business model breakdown

Oddity operates more like a tech company in the beauty industry, leveraging a proprietary digital platform to build, scale, and optimize its brands. Its direct-to-consumer model is powered by data, machine learning, and full control of the customer journey; giving it a structural advantage over traditional beauty incumbents.

Here are the key pillars of the business model:

• Tech-driven DTC model. 100% of sales occur through Oddity’s own digital channels, allowing for higher margins, faster feedback loops, and full ownership of customer data

• Proprietary platform infrastructure. The in-house tech stack includes data science, AI, hyperspectral imaging, and molecular discovery tools, all built on a unified data lake

• Scalable brand engine. The platform supports the launch and growth of multiple brands like Il Makiage and SpoiledChild, with plans for more

• Future monetization potential. The same technology powering its own brands could be licensed to partners, sold as SaaS, or monetized through data, offering upside beyond product sales

The platform is optimized to grow revenue across both customer acquisition and retention. The chart highlights a compelling trend: customers continue to repurchase and their average spend rises year after year.

A simple yet powerful example of the business model’s strength is how Oddity used its rich data ecosystem to reduce return rates on its best-selling shades by 15%. By analyzing a wide range of inputs (purchases, returns, reviews, repurchases, and even customer images) the company was able to fine-tune its product recommendations and significantly improve the customer experience.

In the following sections, you will find detailed insights into key metrics, fair price estimation, a comprehensive SWOT analysis (strengths, weaknesses, opportunities, and risks), and precise buy zone identification. Subscribe now to unlock full access to this newsletter, including exclusive analyses, portfolio tracking, screeners and curated stock picks

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I am especially excited about this one because it marks my second deep dive into a Canadian stock, following my earlier piece on MDA Space (here is the link). Also, if you like the waste management space, you might enjoy my previous article on Waste Management, another major player in the industry and a solid read for anyone who loves exploring the economics of trash.

In this article, we will explore what makes their business model and also compare the company to its major competitors. Let’s dig in!

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Business overview

Waste Connections may be headquartered in Canada, but its business is overwhelmingly US-focused with approximately 86% of its revenue generated south of the border.

At its core, Waste Connections controls multiple stages of the waste handling process: from picking up trash to processing and disposing of it. Here is a closer look at how the business is structured:

• Solid waste collection (72% of the revenue). This is the frontline of the business. Waste Connections collects trash and recyclables from residential neighborhoods, commercial properties, and industrial clients. Most of these services are backed by long-term contracts, providing predictable cash flows and customer stickiness. The company often operates in secondary and rural markets, where competition is limited and pricing power is stronger

• Landfills and transfer stations (16% of the revenue). Waste Connections owns or operates a large network of landfills and transfer stations, particularly in areas with favorable regulatory and economic dynamics. This ownership of disposal infrastructure is a critical advantage, it lowers costs, creates entry barriers for rivals, and locks in a higher margin per ton of waste processed

• Recycling services (3% of the revenue). While not the biggest driver of profits, Waste Connections offers recycling services to meet municipal and customer sustainability needs. This segment includes processing materials like paper, cardboard, plastics, and metals. Revenue can be volatile due to changing commodity prices but the trend is clearly positive

• Others (9% of the sales). Other notable services include handling waste from oil and gas operations (E&P waste), and developing renewable natural gas (RNG) facilities that capture and convert landfill gas into clean energy

Growth drivers

Waste Connections’ EPS growth is powered by a combination of strategic focus, operational discipline, and structural industry advantages. At its core, the company benefits from operating in a highly defensive and non-discretionary sector: people and businesses generate waste in every economic environment. The decentralized operating model empowers local teams to make decisions tailored to their communities, leading to better customer service and operational efficiency (and it also limits the size of the structure).

Route density optimization, inflation-linked pricing contracts, and long-term demographic trends like population growth also are key organic growth drivers. Additionally, Waste Connections is investing in renewable natural gas (RNG) projects and landfill gas recovery, tapping into sustainability trends and adding new sources of revenue aligned with ESG goals. Automation will accelerate in the coming years: this will positively impact margins but will be very CAPEX intensive.

To complement this steady organic growth, Waste Connections has built a robust acquisition engine that adds scale, density, and strategic assets. The company consistently completes dozens of tuck-in deals each year (small, local haulers or disposal providers that can be integrated into existing operations with minimal disruption).

This combination of strong internal growth and smart external expansion has helped Waste Connections steadily grow revenue, margins, and free cash flow year after year: a strong focus from management.

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Benchmark vs competitors

As highlighted in the Waste Management article, here is a look at the market share landscape for the waste services industry in North America.

Waste Connections ranks as the 3rd-largest player in the industry. Here is how it stacks up against its 2 main competitors.

Waste Connections stands out with the strongest growth profile among its peers, delivering impressive performance in both revenue and EPS expansion. Its balance sheet is also healthier than Waste Management’s (WM has taken on additional leverage to acquire Stericycle).

That said, a PE around 41x does raise valuation concerns. Even considering the company’s recession-resistant nature and consistent execution, the current multiple suggests a premium that investors need to weigh carefully.

In the following sections, you will find detailed insights into key metrics, fair price estimation, a comprehensive SWOT analysis (strengths, weaknesses, opportunities, and risks), and precise buy zone identification. Subscribe now to unlock full access to this newsletter, including exclusive analyses, portfolio tracking, screeners and curated stock picks

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In this stock deep dive, I will unpack the causes of Teleperformance’s collapse, outline its new AI-driven narrative, and assess the stock’s upside potential. As with all the analyses, I will walk through key metrics, risks and opportunities, fair-value estimates, and suggested buy zones for interested investors. Let’s dive in!

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The business

Teleperformance is a global leader in outsourced customer experience management and business process outsourcing (BPO), supporting clients across sectors including technology, healthcare, finance, and retail. The company delivers seamless omnichannel customer care, technical support, back-office operations, and analytics to enhance customer engagement and operational efficiency.

Teleperformance operates in 170 markets with a presence in 100 countries, reflecting its global reach. Approximately 40% of its revenue comes from the Americas, while 45% is generated across the EMEA and APAC regions.

Drivers of the Share-Price Decline

Following a post-COVID surge, propelled by one-off contracts, Teleperformance’s shares have tumbled from around 400€ to below 100€. This is a stark reversal for a company once viewed as a rising star. Key events since 2022 include:

• 10 November 2022. Shares plunged after Colombia’s Ministry of Labour launched an investigation into traumatic working conditions in the Tik Tok content-moderation unit, sparking an ESG-driven sell-off by major institutional investors

• 18 November 2022. Under intense ESG scrutiny, Teleperformance announced it would stop signing or renewing contracts for moderating the most graphic user-generated content

• Early 2023. Analysts flagged a structural downtrend as investors grew concerned that rapid AI-driven automation could displace large portions of the workforce and compress service volumes

• 28 February 2024. Shares tumbled 30% to a 7-year low following Swedish fintech Klarna’s launch of an AI assistant, stoking fears that advanced AI tools could erode Teleperformance’s core BPO business

• March 2024. The stock hit its weakest level since December 2016 before a modest rebound, underscoring persistent investor anxiety over AI disruption

• 3 June 2024. Management guided to just 2% – 4% organic growth for FY 2024 (well below historical norms) after missing earlier targets, further undermining confidence in its ability to sustain growth and margins. Growth has not recovered since

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Is Teleperformance beyond recovery?

Despite recent challenges, several factors underpin a bullish outlook.

Ongoing acquisitions

Teleperformance continues to expand its capabilities and market share through strategic deals. For example, the Majorel acquisition, largely equity-financed at attractive prices amid the share-price slump, added roughly 20% to 2024 revenue without diluting key financial metrics.

Smaller tuck-ins such as Capita Translation & Interpreting (in 2023) and ZP (in 2025) have further diversified the service portfolio. With sector valuations at multi-year lows, these acquisitions represent compelling bargains that strengthen Teleperformance’s positioning as the market recovers.

A strategic turn toward AI

Teleperformance has embraced AI not only as a service driver but as a core element of its messaging. This is most visible in two flagship initiatives:

1. The “Centaur Strategy” is a hybrid model in which human experts work alongside AI “co-pilots” to boost efficiency and decision-quality, with some routine tasks fully entrusted to agentic AI

2. The TP.ai Initiative is structured around 3 complementary pillars:

   • TP.ai dataservices. It delivers end-to-end operational support for AI projects to ensure high-quality training inputs

   • TPinfinity. It leverages Teleperformance’s transformation expertise in technology, analytics, consulting and design to accelerate clients’ digital roadmaps

   • TP.ai solutions. It partners with leading AI vendors and customers to develop and deploy co-pilot and autopilot solutions that optimize outcomes across the human–co-pilot–autopilot continuum

Together, these elements signal a clear shift. Teleperformance is no longer just a BPO provider, but a full-stack AI-enabled partner.

Enhanced communication

Teleperformance is enhancing the transparency of its communications to help shift market perception. For instance, it received top honors at the 2024 Globee Golden Bridge Awards for an AI-driven digital solution that streamlines back-office operations.

AI, a real threat or an opportunity?

2 key factors temper the risk of full disruption by AI. First, clients typically seek end-to-end solutions when outsourcing customer service. While AI in autopilot mode can handle roughly half to two-thirds of interactions, human involvement remains essential for complex or sensitive cases.

As a result, companies that can combine skilled human agents, rich datasets and robust AI tools will be best positioned to deliver the service customers expect.

Second, AI represents a powerful lever to improve service quality and operational efficiency. Although revenue growth may come under pressure due to increased competition or new AI-native entrants, the resulting productivity gains are likely to support (or even expand)profit margins.

What could drive future EPS growth?

As Teleperformance rapidly pivots toward AI, its survival seems increasingly likely. The more pressing question, however, is whether it can defend its market share and improve margins.

Based on current evidence, there is reason for cautious optimism. While a return to double-digit revenue growth appears unlikely, the company still has several levers to drive continued EPS growth:

• Operational efficiency gains through AI adoption

• Ongoing acquisitions, supported by a deleveraging balance sheet

• Share buybacks, capitalizing on the currently low valuation (PE is around 9x)

• Expansion into new markets and service offerings. For instance, the LLM (Large Language Model) training market (20% CAGR) represents a promising end market for Teleperformance to monetize its data services

This multi-pronged approach could allow Teleperformance to maintain profitability and shareholder returns, even in a slower growth environment. It is worth noting that this is a high-risk contrarian bet.

In the following sections, you will find detailed insights into key metrics, fair price estimation, a comprehensive SWOT analysis (strengths, weaknesses, opportunities, and risks), and precise buy zone identification. Subscribe now to unlock full access to this newsletter, including exclusive analyses, portfolio tracking, screeners and curated stock picks

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But with a PS near 10x and its close ties to meme stock culture via WallStreetBets, the question remains: is Reddit a serious long-term play or just another hype-fueled ride? Let’s dig in.

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What is Reddit?

Reddit is a social media platform and online forum known for its vast network of user-driven communities, called “subreddits”, where people gather to discuss virtually every topic imaginable, from investing and gaming to niche hobbies and current events. Founded in 2005, Reddit distinguishes itself with a unique structure that emphasizes anonymity, community moderation, and upvote/downvote mechanisms that surface the most relevant content. Reddit functions more like a decentralized collection of interest-based microforums than a traditional social network, fostering deep engagement and highly active communities.

What sets Reddit apart is its influence on internet culture and public discourse. Its communities have sparked viral trends, broken news stories, and even impacted financial markets (most famously through WallStreetBets and the GameStop short squeeze).

80% of Reddit’s revenue comes from the US, with the remaining 20% generated internationally. In terms of users, 45% comes from the US even if the fastest growing communities are from outside the US.

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A fast growing platform

With over 100 million daily active users and 400 million weekly active users, Reddit is demonstrating strong momentum, posting an impressive 30% YoY growth.

One key metric to watch is ARPU (Average Revenue Per User). In the US, ARPU currently stands at $6.27. It is about 30% lower than peers like Pinterest and Snapchat, and over 90% below Meta, the industry leader in monetization. This gap highlights a significant opportunity for revenue expansion.

For investors, Reddit's growth story is multi-dimensional:

• User growth, particularly in international markets, a core focus of the company’s strategy

• ARPU expansion, which grew 23% YoY in Q1 FY25

• Margin improvement, as operating expenses scale more slowly than revenue

To support these goals, Reddit continues to invest aggressively in its technology stack, rolling out new features such as machine translation, enhanced search capabilities, and improved content discovery tools, all aimed at boosting user engagement and monetization.

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Yet, despite this promising backdrop, finding stocks that combine strong growth with reasonable valuations remains a real challenge:

• On one side, you’ve got the premium-priced high-growth players like Fortinet, Palo Alto Networks, CrowdStrike, and SentinelOne

• On the other, the more affordably valued but slower-growing names like Cisco, Check Point Software, and Verisign.

In this article, I will take a closer look at Akamai Technologies. While the company is not without its risks, its ongoing strategic shift in business model could prove to be a game-changer, potentially reshaping its growth profile.

Let’s dive in!

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A transforming business

Akamai (Ticker AKAM) is a global cloud services and content delivery network (CDN). Akamai built a vast global infrastructure to help websites and platforms deliver content faster to users. This was especially critical in the early days of the internet, before high-speed broadband was widespread.

However The CDN business is commoditized, with pricing pressure from cloud giants and smaller providers. In the meantime, the company grew 2 major new activities:

• Cybersecurity. Akamai focuses on zero trust, API security, infrastructure security and application security. Cybersecurity represented 51% of the sales in 2024 (up from 9% a decade ago)

• Cloud computing. Akamai also offers cloud services. Core services offer full stack computing and storage. Edge services offer performance and scalability. Cloud represented 16% of the sales in 2024 (up from 6% a decade ago)

The company has recently made several strategic acquisitions to accelerate its shift in business model. Notable examples include:

• Guardicore (2021). A cybersecurity firm focused on zero-trust architecture

• Linode (2022). A cloud hosting platform aimed at expanding cloud infrastructure capabilities

• Neosec (2023). A cybersecurity startup specializing in API threat detection

These acquisitions reflect a clear push toward strengthening its position in cloud services and cybersecurity, aligning with its long-term transformation strategy.

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Growth drivers

The key growth drivers for Akamai are clearly its cybersecurity and cloud computing segments. However, the decline in its traditional CDN business has largely offset these gains, making it harder to appreciate the full potential of the company's strategic transformation. From 2020 to 2024, overall revenue growth has hovered around 5%, a modest figure that masks the strong momentum in its newer businesses.

In 2024 alone, the cybersecurity division posted 14% growth, while the cloud segment surged by 25%. These figures underscore the company's belief that it can achieve double-digit overall growth before the end of the decade, as the weight of these high-growth areas increases in the revenue mix.

Looking ahead, strategic acquisitions will likely remain a key lever. The acquisition of Linode has already proven highly successful, with strong commercial synergies accelerating growth across the cloud division. With a robust balance sheet, Akamai is well-positioned to continue pursuing targeted M&A opportunities.

Finally, EPS should also benefit from margin expansion and a disciplined share buyback program. Over the past decade, the company has reduced its share count by more than 15%, further enhancing shareholder value.

In the remainder of this article, I will take a deep dive into Akamai’s key metrics, highlight the risks and opportunities ahead, and analyze its fair value, potential returns, and attractive buying zones.

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And I could not agree more with their approach. But let’s dig deeper: how exactly does Morgan Stanley define and select these high-quality business model stocks? And, how have they performed? Let’s take a closer look.

The selection process

Here is the selection process:

• 1. Quant scoring of companies against industry peers for

  • Quality (profitability – eg, ROE / RNOA – and balance sheet strength)

  • Value Factor overlay (eg, FCF Yield, EV / EBITDA and P/B)

• 2. Input from MS bottom-up analysts, focusing on forward-looking assessments of competitive advantages and management quality

• 3. Review by the regional Equity Strategy and Sustainability teams

Interestingly, valuation plays a clear role in the selection process. Perhaps the list should be renamed “Best Business Models at a Reasonable Price” (BBMARP, anyone?). Beyond pure fundamentals, the methodology combines both quantitative metrics and qualitative assessments, introducing a layer of subjectivity into the final selection.

The 2025 selection

The picks are globally diversified. Out of the 31 selections, only 6 are new additions, highlighting a stable and consistent selection process. As a result, we will evaluate performance not only for 2025 but also for 2024, even though some stocks were added at a later stage.

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Performance

The outperformance is clear, even if a few selections may appear unconventional at first glance. YTD, the picks have delivered a positive return of +3.2%, compared to a -3.3% decline for the S&P 500 and a flat +0.5% for the MSCI World.

Over a 1 year horizon, the picks have outperformed their benchmarks by approximately 50%, and over 3 years, by an impressive 100%. Without a doubt, this list deserves close attention.

The reasons of the good performance

What makes this list even more compelling is that some of the names would not have been my first picks: Technip Energies, Deutsche Telekom or Inditex for example. Yet, the performance speaks for itself.

There are several valuable takeaways from this selection:

• Diversification matters. The portfolio spans sectors and geographies, enabling resilience across varying market conditions

• Balanced methodology. The blend of quantitative metrics with qualitative judgment creates a more nuanced and effective selection process

• Valuation is key. Incorporating valuation ensures the picks are not just quality businesses, but also reasonably priced, something that pays off over the long run

• Strong business models stand out. Whether it is Inditex’s proximity-based supply chain, Wolters Kluwer’s data monetization strategy, or the exceptional brand equity of Hermès and Ferrari, each company demonstrates a clearly differentiated and powerful model

• Long-term growth driver. Most of these picks have strong growth drivers that support their long-term potential

While this newsletter provides valuable content for free subscribers, becoming a paid subscriber unlocks even greater benefits to help you gain an edge in the market.

Here is why upgrading to a paid subscription is worth it:

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After a decent growth in 2024 (+8% vs 2023), analysts only expect 1% growth in 2025. Why? Is the company in a bad situation? Let’s find out!

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Last earnings report

For the Q4 24 2024, Zoetis reported revenue of $2.3B, reflecting a 5% increase compared to the same period in 2023. On an operational basis (excluding foreign exchange impacts), revenue grew by 6%. Net income for the quarter was $581M, up 11% from Q4 2023, or $1.29 per share, a 13% increase.

For the full year 2024, Zoetis reported total revenue of $9.1 billion, a 6% increase from 2023. Net income for the year reached $2.5B, or $5.47 per share, up 5% and 7%, respectively.

US revenue rose 11% to $5.1B, while international revenue grew 2% to $4.1B.

The Medicated Feed Additive (MFA) divesture

At the end of Q3 24, Zoetis completed the divesture of its MFA product portfolio to Phibro Animal Health. The goal was to streamline the company’s portfolio, to increase operational focus, prioritize faster growing business lines with higher margin and more innovation.

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The guidance

While the guidance came in below expectations ($9.57B in revenue and $6.30 EPS), this is primarily due to the divestiture we just discussed. Excluding this impact, organic revenue growth is projected to remain robust, in the 6% to 8% range, broadly in line with the company’s historical performance and with my assumptions based on the market growth and market share gains.

Analysts now forecast the following annual revenue figures:

• 2025 $9,362M (+1.1%)

• 2026 $9,978M (+6.6%)

• 2027 $10,548M (+5.7%)

This future growth is fueled by a robust pipeline.

The company remains focus on key elements we like to see as investors:

• Growing above the market growth (therefore gaining market share)

• Investing in innovation and prioritizing highest ROIC opportunities

• Increasing net income faster than revenue (therefore increasing margin)

• Returning excess capital to shareholders through share buybacks and dividends

In the rest of the article, I revise my fair value to account for the growth slowdown, pinpoint strategic buy zones, and break down the potential upside for investors buying in today.

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In this fast-growing cybersecurity universe, Fortinet (ticker: FTNT) stands out as one of the most compelling companies. It is not only one of the largest pure-play cybersecurity firms, but also one of the few that has consistently maintained strong profitability over the years. In this article, we will take a closer look at Fortinet’s business, evaluate its fair value, dig into key financial metrics, and estimate the potential returns for long-term shareholders. Additionally, we will identify attractive entry points for those considering a position in the stock.

If you are interested in this sector, you can read my article about it!

I also wrote an article about Palo Alto Networks that you can find just here.

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The business model

Fortinet’s business model, as illustrated in the image, is built around providing a comprehensive cybersecurity platform that integrates three core pillars: Secure Networking, Unified SASE, and Security Operations.

Secure networking

Fortinet’s foundational offering lies in Secure Networking, which combines high-performance networking with integrated security. This segment includes:

• Network Firewall. Fortinet's flagship FortiGate firewalls are widely deployed to protect network perimeters

• Wireless and Wired LAN. Secure LAN offerings for enterprise connectivity

• 5G. Security for next-gen mobile networks

• OT Security. Solutions for operational technology (industrial control systems)

• NAC (Network Access Control). Managing and securing devices connecting to the network

Security operations

Fortinet supports Security Operations Centers (SOC) with a suite of tools that enhance visibility, automation, and response:

• SOC Platform. Core infrastructure for monitoring and response

• Endpoint Protection. FortiEDR and FortiXDR for device-level defense

• Network Detection & Response (NDR). Identifies threats across the network

• Data Protection, Identity. Enforces data privacy and identity controls

• Exposure Assessment. Proactively identifies vulnerabilities and attack surfaces

This positions Fortinet in the growing XDR (Extended Detection and Response) space, enabling enterprise-wide threat management across endpoints, networks, and clouds.

Unified SASE

Fortinet is expanding aggressively into SASE (Secure Access Service Edge), targeting the growing demand for cloud-delivered security and networking for distributed workforces. This pillar includes:

• SD-WAN. Securely connects branch offices and remote sites

• SSE (Security Service Edge). Core cloud-delivered security services

• Single-Vendor SASE. Fortinet provides both networking and security natively

• ZTNA (Zero Trust Network Access). Secures remote access to applications

• DEM (Digital Experience Monitoring). Ensures quality and performance of applications

• Cloud Firewall, WAF (Web App Firewall), CNAPP (Cloud-Native App Protection Platform). Cloud-specific protections

As enterprises move to hybrid work and cloud environments, Unified SASE enables Fortinet to be a one-stop shop for secure connectivity, replacing multiple point products.

Product vs service

Fortinet generates revenue primarily from two categories:

• Product revenue. Hardware and software sales (e.g., FortiGate firewalls, switches, wireless access points)

• Service revenue. Recurring revenue from security subscriptions and technical support (e.g., FortiGuard security services, FortiCare support, cloud offerings)

Product revenue accounts for approximately 1/3 of total sales, while service revenue makes up the remaining 2/3. In 2024, service revenue grew faster than product revenue (20% vs 12% YoY). Notably, the primary growth driver was Fortinet’s SASE offering, which delivered 28% YoY growth in annual recurring revenue (ARR).

Revenue diversification

The company is highly diversified (company size, geographies and industries) with the US representing only 25% of the sales.

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Strategy of the company

There are two key strategic elements that set Fortinet apart from other cybersecurity companies.

First, Fortinet relies heavily on its own internal R&D rather than aggressive mergers and acquisitions. This contrasts with peers like Palo Alto Networks, which have pursued growth through frequent M&A to expand their product portfolio.

Second, Fortinet’s capital allocation strategy is notably more shareholder-friendly. While many cybersecurity firms are criticized for excessive stock-based compensation (SBC) and shareholder dilution, Fortinet maintains a disciplined approach. Its SBC levels are relatively modest (compared to others at least), and the company actively engages in share buybacks, which support earnings per share growth and enhance shareholder value ($6.4B share buyback programs in the last decade).

Lastly, Fortinet stands out for its consistent focus on profitable growth. Unlike many high-growth cybersecurity peers that prioritize expansion at the expense of profitability, Fortinet has maintained solid margins while scaling.

Naturally, AI and the wide range of opportunities it brings are a key focus for the company and are expected to be a major growth driver moving forward.

Outlook

The company estimates that its Total Addressable Market (TAM) will grow at a 12% CAGR through 2028, and it expects to outpace the market slightly, continuing to gain share across its core segments.

Fortinet operates across three primary business areas:

• Secure Networking is projected to grow at around 7% annually, making it the slowest-growing segment and gradually becoming a smaller portion of the overall business

• Unified SASE is expected to grow at a robust 18% CAGR, serving as the main growth engine, fueled by cloud adoption and hybrid work trends

• Security Operations is forecasted to grow in line with the broader market at approximately 12% per year. However, this area is expected to be heavily impacted by AI, which will enable new product offerings and should drive margin expansion through operational efficiencies

As of the end of 2024, Fortinet holds a net cash position of around $2B, which it primarily plans to use for share repurchases, supported by a current $2B buyback authorization. While Fortinet continues to generate strong free cash flow, which could support acquisitions in 2025, its M&A strategy remains conservative. The company typically acquires smaller firms (3 in 2024, for example) to enhance its platform capabilities. That said, pursuing larger acquisitions could potentially accelerate growth if aligned with strategic priorities.

The rest of this article (including risks, opportunities, fair value analysis, buying zones, and key metrics) is available exclusively to paid subscribers.

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Today, we are diving into a fascinating UK company: Games Workshop. Best known for its miniature wargame Warhammer, the company has built a loyal following. But is its stock a smart investment? Or does it lack the margin of safety needed to be truly compelling? Let’s find out!

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The business model

Games Workshop's business is divided into two main segments:

• Core revenue. This represents the company’s primary activity: designing, producing, and selling its products, including miniature models, paints, and books

• Licensing. A smaller but highly profitable segment, licensing helps expand the brand while generating near-pure profit (£27 million operating profit from £31 million in revenue)

The company designs, produces and distributes itselft. The production center is in the UK and they have 3 distribution centers: UK for Europe, US for North America and Australia.

500 shops sell and distribute Games Workshop’s products. However, just a fraction is directly owned by the company. These shops ensure the distribution of the products (miniature models, paint, books, accessories, merchandising) and are located in UK, USA, Canada, Australia, New Zealand, Japan, China, France, Germany, Spain, Italy, the Netherlands, Eire, Belgium, Austria, Poland, Norway, Sweden, Denmark and Finland.

The different universes

Games Workshop sells products from different universes:

• Warhammer 40K. A grimdark sci-fi universe set in the 41st millennium, where countless factions wage eternal war across the galaxy, ruled by a decaying Imperium under the godlike Emperor

• Age of Sigmar. A high-fantasy setting where powerful gods, warriors, and monsters battle across mystical realms, following the destruction of the Old World and the rise of the Mortal Realms

• The Horus Heresy. A pivotal prequel era in Warhammer 40K, chronicling the galaxy-spanning civil war where the Warmaster Horus betrays the Emperor, leading to the fall of half the Space Marine Legions

• The Old World. A dark and brutal fantasy realm inspired by medieval and Renaissance Europe, filled with warring human empires, monstrous creatures, and ancient magic, serving as the predecessor to Age of Sigmar

• Middle-earth. Based on J.R.R. Tolkien’s legendary works, this universe brings to life the epic struggles of men, elves, dwarves, and orcs in a battle against the Dark Lords Sauron and Morgoth

The recent expansion into the Middle-earth universe will be a significant boost for the company, not only creating a new revenue stream but also attracting fresh players to the world of miniature wargaming, driving both interest and foot traffic to stores.

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More than a simple hobby

The Warhammer hobby offers a rich and engaging experience across four key aspects:

• Collecting. Whether drawn to specific miniatures, inspired by rich lore, or eager to build vast armies, collectors are always expanding their forces, fueled by a steady stream of new releases

• Modelling. Assembling and customizing miniatures, from simple one-piece models to intricate kits, allows hobbyists to develop their creativity and craftsmanship

• Painting. Bringing miniatures to life through painting is both a skill and an art, with hobbyists crafting unique color schemes or following official guides to personalize their models

• Gaming. Tabletop battles range from small skirmishes to massive wars, with players constantly growing their armies and refining their strategies through immersive gameplay

This model offers several key advantages. First, the collecting aspect grants the company strong pricing power, as artificial scarcity can drive up demand and prices. Additionally, modelling and painting create endless opportunities to sell complementary products like accessories, tools, and paints. Finally, the gaming element fosters a highly engaged community, which not only strengthens brand loyalty but also serves as a powerful driver for organic marketing and word-of-mouth promotion.

The next sections will present the key metrics, analyze risks and opportunities, and propose a potential TSR, fair price, and buying zones. Want to unlock these insights? Become a paid subscriber!

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