Continuing the trend from the first quarter, the short-term performance of this selection has been undeniably disappointing. Unlike my actual portfolios, I structured this specific watchlist around the hypothesis that extreme AI market valuations would begin to normalize. As a result, this selection intentionally lacks exposure to the high-flying momentum stocks that have heavily driven the broader market’s recent gains.

For a true long-term investor, however, near-term relative underperformance is simply noise if the underlying structural moats remain intact. Price action follows narratives in the short run, but it always follows cash flows in the long run. To separate market noise from fundamental reality, we will thoroughly review the core investment theses for all 12 stocks below.

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Performance review

S&P500 performance: +9.3%

Outperformers:

• Bonesupport (BONEX.ST) +19.5%

• Diaceutics (DXRX.L) +14.1%

• InPost (INPST.AS) +47.1%

Slight underperformers:

• DLocal (DLO) +5.2%

• Novo Nordisk (NVO) +0.5%

Underperformers:

• Clinuvel (CUV.AX) -17.7%

• Uber (UBER) -8.9%

• Paypal (PYPL) -22.1%

• Mercadolibre (MELI) -12.5%

• Dassault Systemes (DSY.PA) -22.4%

• Shift4 Payments (FOUR) -18.4%

• Adobe (ADBE) -37.2%

Total: -4.4%

Business performance review

The stock price tells a story, let’s identify the business performance for each stock and I will share my vision on each stock. Please not that not all these stocks are in my portfolios.

1. Adobe

Investment thesis 🟢

The market continues to mischaracterize Adobe as an AI loser. Despite the negative narrative, Adobe’s core metrics remain exceptionally robust. Firefly and its broader AI ecosystem are already transitioning from experimental tools into meaningful, high-margin revenue drivers. Trading at an incredibly compressed PE of 12x, the stock offers an asymmetric risk-reward profile.

2. Bonesupport

Investment thesis 🟢

Fundamental execution remains exceptionally strong, as evidenced by their recent Q1 2026 financial results, which printed an impressive 16% revenue growth on a reported basis and a staggering 33% in constant currency. While a trailing PE multiple north of 40x may initially trigger valuation alarms for traditional value screens, this top-line acceleration, coupled with compounding margin expansion, leaves the stock with a forward PEG well under 1. For a dominant business scaling into its operating leverage phase, this is a highly attractive configuration.

3. Clinuvel

Investment thesis 🟢

While the company achieved the highest first-half sales in its history, near-term profitability was temporarily compressed by a deliberate, 22% increase in R&D and clinical trial investments. Far from a structural breakdown, this aggressive spending represents a conscious choice to front-load capital to secure future pipelines. Trading at a compressed PE multiple just north of 14x, the market is mispricing this short-term margin headwind, leaving the mid-term thesis intact. The key inflection year to watch for this asset remains 2028.

4. Dassault Systemes

Investment thesis 🟠

Top-line growth remains under pressure, though not from direct AI displacement. Instead, Dassault Systèmes is navigating a temporary enterprise budget crunch as CIOs aggressively redirect IT funding and project priority toward immediate AI initiatives, diluting wallet share for legacy software deployments. Crucially, Dassault remains deeply entrenched in its clients' mission-critical workflows and core engineering processes. This structural stickiness ensures a defensive baseline, which they are well-positioned to monetize as they roll out their own high-value, AI-driven services over the coming years. But from the outside, Dassaults seems slower than some of its peers…

5. Diaceutics

Investment thesis 🟢

While absolute profitability for FY26 is tracking slightly below my initial projections, the core top-line growth engine remains robust. Diaceutics continues to successfully expand its commercial market penetration while actively rolling out higher-value data and diagnostic services. For a high-growth medical data platform, temporary margin compression is a natural byproduct of scaling the network. The expanding market footprint validates the underlying long-term compounding thesis.

6. DLocal

Investment thesis 🟢

The company’s recent performance continues the operational dynamic witnessed in previous quarters: resilient, solid top-line revenue growth balanced against a slightly compressed take rate. While the market has reacted negatively, viewing this compressed margin as structural evidence of intensifying competition (a risk we monitor closely) this take-rate normalization is an entirely expected evolution of their scaling model. For now, the core underlying fundamentals remain highly intact, and the long-term investment thesis holds perfectly.

7. InPost

Investment thesis 🟢

InPost has become a takeover target, a clear validation of the intrinsic value we identified early on. However, the current bid looks remarkably opportunistic. The headline acquisition price significantly undervalues the compounding long-term shareholder value that InPost's network is built to deliver. While a near-term premium is always welcome on paper, a premature exit at these levels robs patient investors of the true multi-year upside.

8. Mercadolibre

Investment thesis 🟢

MercadoLibre continues to exhibit the exceptional fundamental execution that cements its position as Latin America's premier digital ecosystem. Across both the e-commerce marketplace and the Mercado Pago fintech platform, the company is successfully driving user monetization and deepening its logistics moat. While the market occasionally expresses near-term anxiety over credit-book scaling, increasing competition or regional margin fluctuations, Mercadolibre’s structural advantages give it unmatched pricing power and a multi-year compounding runway that few global peers can match.

9. Novo Nordisk

Investment thesis 🟠

Novo Nordisk has staged a strong rebound over the last quarter. The strategic narrative championed by new CEO is beginning to bear fruit: the company is deliberately sacrificing near-term operating margins and breakneck growth rates to build long-term market dominance. By aggressively expanding physical production capacity and aggressively lowering pricing points to secure massive commercial supply contracts, Novo is successfully locking out emerging competitors and cementing its multi-decade footprint in the global GLP-1 market.

10. Paypal

Investment thesis 🔴

While the Q1 2026 report came in slightly ahead of my initial expectations, the core investment thesis remains broken. Although I anticipated 2026 would be a transition period, management’s FY guidance represents a severe operational reset. With projections calling for negative-to-flat growth in transaction margin dollars and stagnant EPS, the business is clearly losing ground to intensifying competition. At this stage, the primary equity thesis relies entirely on its compressed 9x PE multiple. The company continues to aggressively cannibalize its own float via massive share repurchases.

11. Shift4 Payments

Investment thesis 🟢

Shift4 Payments continues to deliver robust fundamental execution, posting strong Q1 2026 results that saw revenue surge 32% YoY. The underlying investment thesis remains highly intact, propelled by aggressive international expansion. The company’s integrated Shift4 One payment and tax-free shopping software is rapidly scaling across global tourist corridors. We can note insider buys and the aggressive capital return program via share repurchase.

12. Uber

Investment thesis 🟢

Headline revenue growth faced minor technical headwinds due to accounting business model adjustments, printing at a modest 14% reported increase. However, the core platform momentum remains white-hot: gross bookings accelerated 21% on a constant-currency basis to $53.7B, driven by a global audience expanding to 199M monthly active users. Management is successfully demonstrating that its massive network effect yields immense pricing power and cost discipline, pushing free cash flow to a record trailing twelve-month run rate of $9.8B. Backed by a $3B quarterly share buyback and an ambitious autonomous vehicle fleet deployment across 15 global cities by year-end, Uber remains strong.

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Conclusion

Ultimately, the majority of this selection offers an asymmetric hedge against a potential slowdown in AI narrative. Valuations across these 12 holdings remain highly reasonable, top-line growth is more than decent and the fundamental investment theses are mostly intact.

As an investor, watching a high-conviction watchlist temporarily underperform the benchmark is always a test of discipline. However, market history confirms that over multi-year horizons, stock prices inevitably follow structural EPS growth, not short-term sentiment. While it appears I was simply too early for the current market cycle, the fundamentals remain entirely on our side. The year is far from over, and I am highly comfortable with these compounding engines through the second half.

What are your thoughts? Do you expect the AI-driven momentum to squeeze out value compounders through the end of the year or will H2 bring a broader market rotation back toward fundamentals? Let me know in the comments below.

In this deep dive, we break down the global TIC market and run a comprehensive, framework-driven analysis on the industry’s 6 main companies using our Quality Stocks Investment Framework:

• Eurofins Scientific (France)

• Bureau Veritas (France)

• SGS SA (Switzerland)

• UL Solutions (USA)

• ALS Limited (Australia)

• Intertek Group (UK)

For paid subscribers, we take the analysis one step further. Beyond identifying individual stock ideas, I apply the full Quality Stocks Investment Framework, including thematic screeners based on the Quality Stocks Score, fair value estimates, detailed Total Shareholder Return (TSR) breakdowns, defined buy zones and my investment verdict (Attractive / Conditional / Unattractive). This added layer is designed to bridge the gap between high-level insights and actual execution, helping long-term investors make more disciplined and risk-aware decisions.

At the end of this article, I will reveal exactly which one of these 6 compounders is officially being added to my portfolio this month.

If you enjoy Thematic Selections, be sure to check out the latest editions

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Why Look at TIC Right Now?

1. The Defensive Growth Cushion

We are operating in a macroeconomic environment where household purchasing power is showing visible signs of strain, credit delinquencies are ticking up and the cost of capital remains persistently high. In a slowing economy, discretionary consumer spending dries up.

The TIC basket benefits from non-discretionary, legally mandated demand. If a shipping vessel needs its hull structurally certified to sail, a food supplier requires contamination screening to pass customs or an electrical component needs safety marks before hit retail shelves, the service happens regardless of GDP growth or interest rate hikes. This regulatory cushion gives these businesses bond-like defensive qualities during market downturns, while their commercial pricing power protects their high margins from inflationary pressures.

2. The Unstoppable Regulatory Tailwind

Aside from their defensive resilience, the long-term compounding thesis for this sector is backed by the most predictable macroeconomic trend in existence: an exponentially multiplying global regulatory burden (used for customer safety and for hidden protectionism).

Every single year, governments introduce stricter environmental mandates, harsher product safety codes, and new ESG requirements (like Europe’s Corporate Sustainability Reporting Directive). The global TIC market is projected to expand toward a $300B absolute pool over the next decade. By investing in these pick-and-shovel enablers, you are taking the underwriter’s position on global compliance. Whether a company is measuring toxic PFAS “forever chemicals” in a local water grid or auditing supply chain carbon footprints, the companies in our screener collect a toll on every single transaction.

3. Switching Costs (The Laboratory Network Lock-in)

In most industries, customers can jump to a competitor if a cheaper or slightly better option comes along. In the compliance world, making a switch can be difficult because of logistics or regulation.

Once a multinational manufacturer integrates its global supply chain workflows into a specific TIC vendor’s proprietary auditing software or laboratory network, the cost of ripping out that infrastructure is high. It requires retraining compliance teams, re-mapping data integrations across multi-country export facilities and risking friction with strict local customs authorities who already trust the incumbent’s testing stamp. The operational friction and legal risk of an uncertified product shipment create a decent customer retention mechanism.

4. The Recurrence

TIC enablers enjoy a reliable form of recurring revenue: legally mandated physical sample volume.

Take the geochemistry and mineral division of ALS Limited as a prime example. They own the highly specialized hub-and-spoke laboratory networks near global mining hubs. When mining exploration companies drill for core samples, they are legally required to route physical core segments through accredited labs to verify ore grades for public financial markets. The mine literally cannot raise capital or report reserves without purchasing these ongoing testing cycles. Similarly, consumer product testers like Intertek or UL Solutions see forced recurrence as clients refresh consumer electronics or apparel line-ups every season, every new SKU requires a brand new round of certification.

5. Extreme Fragmentation & M&A

Despite being dominated on the public markets by a handful of prominent multi-billion dollar names, the global TIC landscape is fragmented. The top ten largest companies combined control less than 25% of the total market. The remaining 75% of the industry is a vast ocean of tens of thousands of local, owner-operated laboratories, family-owned inspection businesses or regional certification boutiques.

This extreme fragmentation is the ultimate playground for an institutional serial acquirer. And all the companies we highlight run a continuous M&A strategy.

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The 6 stocks

Eurofins Scientific (France) is the global powerhouse of laboratory-based bio-analysis, purposefully avoiding physical field inspections to construct an elite network of state-of-the-art labs for food, environmental and pharmaceutical testing. Driven historically by a hyper-aggressive, founder-led M&A machine that absorbed over 900 laboratories, the company built an unmatched scale moat that competitors cannot easily replicate. Having completed its multi-year capital expenditure push, Eurofins is currently executing a clear pivot toward organic optimization and digital infrastructure harmonization.

Bureau Veritas (France) stands out as a highly stable multi-specialist compounder, supported by its dominant positions in building infrastructure compliance and global marine fleet classification. The core economic engine behaves like a premium utility, once a multi-million dollar container ship or structural asset is stamped by BVI, that certification acts as a mandatory passport for international trade and insurance frameworks. While its labor-intensive field inspection wings render it slightly more exposed to short-term foreign exchange fluctuations, its underlying structural backlog remains exceptionally defensive.

SGS (Switzerland) is the largest traditional Testing, Inspection and Certification incumbent by revenue. It operates an unrivaled network stretching across global agricultural and mineral trade routes. While historically viewed by quality investors as a slow-moving, GDP-indexed giant with uninspiring capital efficiency, the company is undergoing an aggressive operational transformation under new leadership. Shifting away from low-margin, fragmented regional roll-ups, SGS inflected its strategy by executing a massive $1.3B acquisition of Applied Technical Services (ATS). This move repositions their capital allocation engine directly into higher-margin, high-barrier industrial, aerospace and safety testing niches across North America.

UL Solutions (USA) is the premium asset of the public TIC sector, maintaining a near-impenetrable safety monopoly through its gold-standard “UL Listed” validation mark. Manufacturers are effectively legally mandated to secure UL’s certification before selling consumer electronics, smart home appliances or commercial hardware in the United States. Spun out via a successful IPO, the company leverages its exceptional EBITDA margin profile and robust free cash flow generation to fund aggressive geographic expansions into Europe and Asia. Its structural growth is strongly protected by rapid product lifecycle refreshes and sweeping secular tailwinds in EV battery safety and smart grid electrification.

ALS Limited (Australia) operates a dynamic and high-growth framework, fundamentally anchored by its position as the global number-one laboratory network for geochemistry and mining mineral analysis. Recognizing the inherent cyclicality of resource exploration, management has successfully executed a multi-year capital reallocation program. They deployed substantial cash into downstream, non-cyclical Life Sciences assets, including the strategic integration of Nuvisan in European pharma and Wessling in European environmental testing. While these large acquisitions have caused minor, temporary dilutions to group margins, they give ALS an exceptional runway to capture market share in high-margin pharmaceutical development and global clean water testing.

Intertek Group (UK) has deliberately bypassed heavy commodity field testing to focus on high-value retail, apparel and consumer product supply chain assurance. By embedding its proprietary “Total Quality Assurance” software and auditing solutions directly into the supply chains of premium global brands, Intertek commands superior pricing power and structural EBITDA margins exceeding 21%. Rather than chasing capital-intensive laboratory footprints, Intertek allocates its free cash flow exclusively toward light-asset software additions and global compliance advisory platforms.

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Unlock the Full Analysis. For each of the 6 stocks, I apply the Quality Stocks Investment Framework in full:

• Quality Score-based screener

• Fair value estimates & detailed Total Shareholder Return (TSR) breakdowns

• Defined buy zones

• And a clear investment verdict: Attractive, Conditional or Unattractive

This is where insights turn into action

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Investing in healthcare is often presented as a high-stakes gamble. The financial media loves to cover the dramatic binary events: a biotech startup soaring 200% on a positive Phase III FDA approval or a pharmaceutical giant losing billions overnight as a blockbuster drug falls off a patent cliff. But chasing those headlines is difficult and often risky, it is a game of roulette where the house always has the edge.

In this Thematic Ideas & Screeners report, we are ignoring the binary bets entirely. Instead, we are turning our Quality Stocks Investment Framework toward the ultimate pick-and-shovel operators of the healthcare universe.

For paid subscribers, we take the analysis one step further. Beyond identifying individual stock ideas, I apply the full Quality Stocks Investment Framework, including thematic screeners based on the Quality Stocks Score, fair value estimates, detailed Total Shareholder Return (TSR) breakdowns, defined buy zones and my investment verdict (Attractive / Conditional / Unattractive). This added layer is designed to bridge the gap between high-level insights and actual execution, helping long-term investors make more disciplined and risk-aware decisions.

If you enjoy Thematic Selections, be sure to check out the latest edition on Enterprise Software

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Why Look at Medical Enablers Right Now?

Every long-term investor faces a core dilemma: how to position a portfolio for structural growth without overpaying for hype. For the last few quarters / years, the broader markets have been completely dominated by a narrow, high-multiple AI infrastructure trade. While tech multiples have expanded to historical premiums, the healthcare equipment and diagnostics sector has quietly lagged the broader market, creating an incredibly compelling setup for quality-focused investors.

There are several distinct reasons why this sector deserves a closer look

1. Structural Valuation Inefficiency

The financial market is currently suffering from a severe case of tunnel vision. Because capital has aggressively chased software and semiconductors, many elite MedTech and diagnostic compounders have experienced multi-year valuation compression.

Historically, companies like Idexx, Stryker or ThermoFisher command massive premium multiples because their earnings are highly predictable. Today, however, many of these stocks are trading near or below their 5-year historical average multiples (and often at the same valuation). When a high-quality business with structural moats experiences a valuation contraction while its underlying fundamentals continue to grow, it flashes a bright green light for our investment framework.

2. The Defensive Growth Cushion

We are operating in a macroeconomic environment where household purchasing power is showing visible signs of strain, credit delinquencies are ticking up and the cost of capital remains persistently high. In a slowing economy, discretionary consumer spending dries up.

The medical infrastructure basket benefits from non-discretionary demand. If a patient needs a heart valve replacement (Edwards Lifesciences), a continuous glucose monitor to prevent insulin shock (Dexcom) or an orthopedic joint replacement to maintain mobility (Stryker), the procedure happens regardless of GDP growth or interest rate hikes. This non-discretionary cushion gives these businesses bond-like defensive qualities during market downturns, while their commercial pricing power protects their high margins from inflationary pressures.

3. The Unstoppable Demographic Tailwind

Aside from their defensive resilience, the long-term compounding thesis for this sector is backed by the most predictable macroeconomic trend in existence: global aging.

By 2030, every single Baby Boomer will be over the age of 65. Statistically, the consumption of medical procedures, diagnostic testing and health monitoring scales exponentially as a population crosses this age threshold. The global medical device market alone is projected to nearly double, scaling toward a $1.2T market over the next decade.

By investing in the pick-and-shovel enablers, you are taking the underwriter’s position on this demographic shift. Whether a hospital is managing higher surgery throughput or a local vet clinic is running more senior pet screenings, the companies in our screener collect a toll on every single transaction.

4. High Switching Costs (The Clinical Ecosystem Lock-in)

In most industries, customers can jump to a competitor if a cheaper or slightly better option comes along. In healthcare, making a switch can be a logistical and regulatory nightmare.

Once an outpatient surgical center installs a specific set of equipment or a laboratory standardizes its testing workflows around a vendor like ThermoFisher, the cost of ripping out that infrastructure is prohibitive. It requires retraining entire nursing staffs, updating electronic health record (EHR) data integrations and re-validating strict compliance protocols.

Furthermore, surgeons develop experience with specific instruments. A hospital administrator cannot easily force an orthopedic surgeon to switch from a Stryker joint replacement system to a competitor just to save a few hundred dollars. The operational friction and clinical liability risk create a nearly unbreakable customer retention mechanism.

5. The Razor-and-Blades Lifeline (Forced Recurrence)

While tech companies boast about SaaS retention, elite medical enablers enjoy an even more reliable form of recurring revenue: legally mandated physical consumables.

Take Steris as a prime example. They sell the massive autoclaves and washing systems (the razor) used to clean surgical tools. Once installed, hospitals are legally required to purchase Steris’s proprietary chemical indicators, biological test packs, and sterilization wraps (the blades) to verify every single cleaning cycle. The hospital literally cannot operate without buying these refills.

Similarly, Dexcom derives roughly 91% of its revenue from its continuous glucose monitoring (CGM) patches. These sensors are hard-coded to automatically shut down after 10 to 15 days of use. The patient cannot choose to pause their subscription, they must open a new consumable patch, guaranteeing an automated re-order lifecycle.

6. Structural Secular Shift: The Migration to Outpatient Care

One of the most consequential structural shifts taking place across healthcare is the rapid migration of procedures out of legacy, high-cost hospitals and into Ambulatory Surgical Centers (ASCs) and outpatient clinics. Driven by changes in regulatory reimbursement frameworks, insurance providers are aggressively pushing complex orthopedic, spine and cardiac catheter procedures to these leaner facilities.

This transition is a massive catalyst for pick-and-shovel enablers. ASCs have entirely different economics than massive city hospitals, they require flexible, capital-light equipment setups. Companies like Steris and Stryker have adapted aggressively, shifting from selling outright heavy capital machinery to offering blended leasing, software bundling and subscription service contracts that match ASC operating budgets. This turns what used to be lumpier CAPEX sales into predictable operational revenue streams.

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The 17 picks

To systematically screen these companies through our framework, we have broken down our watch list into 4 thematic sub-baskets based on their operational models and revenue drivers.

Basket 1: The Razor-and-Blades Consumable Powerhouses

These companies dominate the highest-margin segment of healthcare. They sell essential, single-use physical consumables that are automatically thrown away and re-ordered after a test, a medical procedure or a product manufacturing cycle.

• Dexcom ($DXCM). The undisputed leader in continuous glucose monitoring (CGM). It boasts a roughly 91% recurring revenue profile driven by automated 10-to-15-day wearable sensor replacement cycles

• West Pharmaceutical Services ($WST). The definition of a quiet monopoly. They manufacture the critical packaging components (the specific elastomer stoppers, seals and syringe plungers) required for almost every injectable biological drug and vaccine globally

• Idexx Laboratories ($IDXX). The global king of veterinary diagnostics. They seed veterinary clinics with diagnostic machinery at low margins, then capture decades of high-margin recurring cash flow via proprietary on-site testing kits and assays

• Sartorius Stedim Biotech ($DIM.PA). A core bioprocessing pure-play. They provide the single-use bioreactor bags, filters and fluid management systems that global biopharma companies rely on to safely grow and manufacture complex biologic drugs.

• Senzime ($SEZI.ST). A hyper-focused Swedish micro-cap pioneer operating a textbook razor-and-blades model in the operating room. They manufacture the TetraGraph, a precision system used by anesthesiologists to monitor patient muscle paralysis depth during surgery. Backed by new global clinical mandates, Senzime frequently utilizes a capital-light hardware placement model in hospitals to bypass tight budget cycles, automatically unlocking high-margin recurring sales via their single-use disposable smart-sensors (TetraSens), which represent roughly 76% of net company revenue (and soon almost 90%)

Basket 2: Life Science Tools & Laboratory Infrastructure

The scientific gatekeepers. These companies provide the foundational analytical instruments, reagents and software that power global academic research, drug discovery and clinical trial pipelines.

• Thermo Fisher Scientific ($TMO). The ultimate, scaled aggregator and manufacturer of life sciences tools. It acts as a non-discretionary one-stop-shop for clinical labs worldwide

• Danaher ($DHR). An elite compounder operating a highly successful decentralized model, laser-focused on bioprocessing, diagnostics and high-barrier life science tools

• Agilent ($A). A premier provider of precision analytical chemistry equipment, chromatography systems and mass spectrometry instruments used for strict quality control across pharma and industrial labs

• Waters Corporation ($WAT). A liquid chromatography and high-performance analytical specialist that recently doubled its total addressable market by executing a massive merger with BD’s Biosciences division

Basket 3: High-Barrier MedTech & Interventional Implants

These are the premier engineering giants of the operating room. While their upfront equipment sales can experience macroeconomic cycles, their core revenue is highly predictable, backed by massive doctor switching costs, regulatory safety hurdles and intellectual property.

• Boston Scientific ($BSX). A high-performing innovator dominating interventional cardiology, peripheral interventions and endoscopy, experiencing industry-leading organic revenue growth

• Stryker ($SYK). The powerhouse of the orthopedic surgical ward, selling everything from the physical joint replacements to the robotic operating tables and power tools utilized by surgeons

• Edwards Lifesciences ($EW). The undisputed global pioneer in structural heart therapies, controlling the lion’s share of transcatheter aortic valve replacements (TAVR)

• Abbott Laboratories ($ABT). A highly diversified healthcare fortress spanning consumer nutrition, traditional diagnostics, and elite medical devices (such as the FreeStyle Libre glucose monitor)

• Medtronic ($MDT). The legacy giant of medical devices. While it historically suffered from sluggish growth, it is undergoing an intense operational restructuring to streamline its portfolio and restore its compounding power

Basket 4: Specialized Monopolies & Ecosystem Niches

These players do not try to be everything to everyone. Instead, they completely control highly specific, mission-critical workflow niches within the healthcare ecosystem where competition is virtually non-existent.

• Steris ($STE). A legal structural monopoly in infection prevention. They control the specialized radiation and autoclave facilities that hospital systems and pharma manufacturing plants are legally required to use to sterilize their tools and products

• Resmed ($RMD). The global leader in cloud-connected sleep apnea treatment systems. They monetize a highly recurring ecosystem built on continuous digital patient monitoring software and ongoing replacement loops for consumer masks and tubes

• Medistim ($MEDI.OL). A spectacular Nordic micro-cap monopoly that provides the specialized ultrasound imaging and transit time flow measurement (TTFM) probes used by cardiac surgeons to verify blood flow in real time during coronary artery bypass surgeries

The recurring revenue

As you know this is something I like. Here is the recurring revenue for each company

• West Pharmaceutical ($WST). ~100% recurring | Every vial or syringe of injectable or biological drugs (including GLP-1s) requires their regulatory-validated elastomer stoppers and seals

• Idexx Laboratories ($IDXX). ~91% recurring | In-clinic veterinary analyzers require continuous purchases of proprietary chemical diagnostic test kits and assays

• Dexcom ($DXCM). ~91% recurring | Wearable continuous glucose monitors (CGMs) are hardcoded to expire, forcing patients to continually buy replacement physical sensors every 10 to 15 days

• Steris ($STE). ~80% to 85% recurring | Hospitals are legally mandated to consume their specialized chemical indicators and sterility wraps during every single instrument sterilization cycle

• Sartorius Stedim Biotech ($DIM.PA). ~75% to 80% recurring | Biomanufacturing lines use disposable plastic bioreactor bags and process filters that must be replaced after every single batch of biologic drugs

• Senzime ($SEZI.ST). ~76% recurring (higher soon) | Their surgical muscle-paralysis monitors utilize zero-upfront placements, locking hospitals into buying proprietary, single-use patient smart-sensors for every operation

• Resmed ($RMD). ~75% recurring | Natural degradation of plastic CPAP masks and tubing triggers insurance-subsidized replenishment cycles every 3 to 6 months, layered with digital SaaS patient-monitoring fees

• Danaher ($DHR). ~70% to 75% recurring | Their massive global base of laboratory instruments requires a steady, continuous pull of proprietary bioprocess separation resins and testing reagents

• Medistim ($MEDI.OL): ~68% recurring | Surgical workflows utilize a per-procedure usage smart-probe fee model, generating transaction-based recurring cash flows every time a cardiac bypass surgery occurs

• Agilent ($A). ~66% recurring | Their installed analytical instruments require ongoing re-orders of specialty chromatography columns alongside long-term maintenance service contracts

• ThermoFisher ($TMO). ~65% to 70% recurring | Acts as the non-discretionary partner for global labs, which must continually buy everyday catalog consumables and raw testing chemicals to remain operational

• Waters Corporation ($WAT). ~55% to 60% recurring | High-performance liquid chromatography machines generate constant consumable demand for precision columns used in high-frequency pharmaceutical quality control

• Abbott Laboratories ($ABT). ~50% to 55% recurring | Anchor-driven by rapid diagnostic test strips and the rolling consumable sales of their FreeStyle Libre continuous glucose monitor patches

• Boston Scientific ($BSX). ~45% to 50% recurring | While implants are one-time events, procedures consume a highly predictable, single-use suite of delivery catheters, guidewires and mapping sensors that are thrown away immediately

• Stryker ($SYK). ~40% to 45% recurring | Their robotic surgical systems (Mako) lock hospital groups into buying proprietary orthopedic replacement joints and single-use disposable attachments

• Edwards Lifesciences ($EW). ~35% to 40% recurring | Hospital systems maintain predefined, rolling inventories of structural heart valves, triggering automatic re-orders from Edwards as patient surgeries consume them

• Medtronic ($MDT). ~35% to 40% recurring | Driven by high-frequency surgical consumable loops, including diabetic insulin pump infusion sets, advanced vascular staplers and single-use cutting tips

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Unlock the Full Analysis. For each of the 16 stocks, I apply the Quality Stocks Investment Framework in full:

• Quality Score-based screener

• Fair value estimates & detailed Total Shareholder Return (TSR) breakdowns

• Defined buy zones

• And a clear investment verdict: Attractive, Conditional or Unattractive

This is where insights turn into action

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In this article, I apply the Quality Stocks Framework to the industry's Big 3: CrowdStrike, Palo Alto Networks, and Fortinet.

At the start of the year, I introduced the Quality Stocks Investment Framework, a rigorous & systematic approach to navigating the markets. This methodology bridges the gap between raw data and decisive execution through 3 key pillars:

• Selection. Identifying high-conviction compounders using a proprietary scoring system and checklist

• Valuation. Determining fair value and projected Total Shareholder Return (TSR)

• Execution. Pinpointing buy zones to transform deep analysis into actionable trades

For a deeper dive into the mechanics of this system, explore the full breakdown in the article below

• Free Subscribers. Access the analysis of Palo Alto Networks

• Paid Subscribers. Unlock the analysis of Crowdstrike and Fortinet including my personal strategy for the broader sector

Stock #1 - Palo Alto Networks

Palo Alto Networks is the market’s ultimate platform aggregator, shifting the industry from fragmented tools to unified security ecosystems. Following its acquisition of Cyberark in early 2026, the company has successfully integrated network, cloud and identity security into a single offering. While this aggressive M&A strategy has temporarily complicated its ROIC profile, the move has created immense switching costs for enterprise clients who now rely on Palo Alto for their entire security architecture. It is a one-stop-shop will provide more durable margins than niche competitors. Beware to SBC though

Current price: $240

Quality Stocks Investment Framework

• Growth score: 98/100 🟢

• Quality score: 58/100 🟠

• Valuation score: 7/100 🔴

• Checklist:

  • Acquisition: YES 🟢 (a lot!)

  • Recurring revenue: YES 🟢

  • Increasing margin: YES 🟢

  • Market share gain: YES 🟢

  • No (or low) dilution: NO 🔴 (huge SBC)

  • Risk level: LOW 🟢

• Fair price: $155

• Buy zones: $189 / $145 / $130

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• Selection. Identifying high-conviction compounders using a proprietary scoring system and checklist

• Valuation. Determining fair value and projected Total Shareholder Return (TSR)

• Execution. Pinpointing buy zones to transform deep analysis into actionable trades

For a deeper dive into the mechanics of this system, explore the full breakdown in the article below

In this article, I am highlighting 12 elite large-cap compounders that stand apart from the pack. Each selection earns a superior score in both Quality and Growth, the 2 most critical factors for long-term outperformance.

In today’s volatile landscape, identifying best-in-class assets is the most effective way to build a resilient watchlist, regardless of market direction.

• Free Subscribers. Access the analysis on 3 featured stocks with the full Quality Stocks Investment Framework (Score, Checklist, Fair Value, Buy Zones)

• Paid Subscribers. Unlock the full 12-stock list the full Quality Stocks Investment Framework (Score, Checklist, Fair Value, Buy Zones)

Stock #1 - Adyen (ADYEN.AS)

The ultimate "lean" payment platform. By 2026, its single-stack tech is gaining space vs its legacy competitors, converting massive enterprise volume into pure free cash flow with industry-leading efficiency

Current price: 878€

Quality Stocks Investment Framework

• Growth score: 100/100 🟢

• Quality score: 95/100 🟢

• Valuation score: 76/100 🟢

• Checklist:

  • Acquisition: NO 🔴

  • Recurring revenue: YES 🟢

  • Increasing margin: STABLE 🟠

  • Market share gain: YES 🟢

  • No (or low) dilution: YES 🟢

  • Risk level: LOW 🟢

• Fair price: 1,319€

• Buy zones: 840€ / 640€ / 430€

Stock #2 - Taiwan Semiconductor (TSMC)

The world’s silicon gatekeeper. It holds a monopoly on the 2nm nodes required for AI, making it the indispensable foundation for every major tech giant’s hardware roadmap

Current price: TWD1,950

Quality Stocks Investment Framework

• Growth score: 100/100 🟢

• Quality score: 92/100 🟢

• Valuation score: 76/100 🟢

• Checklist:

  • Acquisition: NO 🔴

  • Recurring revenue: NO 🔴

  • Increasing margin: YES 🟢

  • Market share gain: YES 🟢

  • No (or low) dilution: MEDIUM 🟠

  • Risk level: HIGH 🔴

• Fair price: TWD2,067

• Buy zones: TWD1,500 / TWD1,180 / TWD820

Stock #3 - Applovin (APP)

An AI-software pivot success story. Its Axon engine has turned mobile advertising into a high-margin money printer, outperforming traditional ad networks through machine learning

Current price: $385

Quality Stocks Investment Framework

• Growth score: 100/100 🟢

• Quality score: 92/100 🟢

• Valuation score: 60/100 🟢

• Checklist:

  • Acquisition: RARE 🟠

  • Recurring revenue: YES 🟢

  • Increasing margin: YES 🟢

  • Market share gain: YES 🟢

  • No (or low) dilution: YES 🟢

  • Risk level: MEDIUM 🟠

• Fair price: $563

• Buy zones: $370 / $315 / $205

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Read more

However, the first quarter of 2026 has provided a stark reminder that stock prices and business fundamentals do not always move in tandem.

To be direct: the performance so far has been bad. There is no way to sugarcoat a 6.1% lag behind the S&P 500. Our list of names has faced a brutal wave of multiple compression. To the casual observer, the red on the screen looks like a failure. To the Quality investor, it often signals a widening gap between a company’s intrinsic value and its market price. But sometimes the thesis is broken. This will be one of the goal of this article to identify worsening fundamentals and improving fundamentals.

Despite the general marasm of the portfolio’s price action, we did have a stroke of luck. Our thesis on InPost (centered on its dominant logistics network and increasing market share) has drawn significant institutional eyes, leading to a takeover target that has provided a much-needed spark of outperformance in an otherwise difficult quarter.

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Performance review

S&P500 performance: -4.6%

Outperformers:

• Bonesupport (BONEX.ST) +4.7%

• Diaceutics (DXRX.L) +17.3%

• InPost (INPST.AS) +43.6%

Slight underperformers:

• DLocal (DLO) -8.3%

• Uber (UBER) -12.0%

• Mercadolibre (MELI) -14.2%

Underperformers:

• Clinuvel (CUV.AX) -20.5%

• Paypal (PYPL) -22.5%

• Novo Nordisk (NVO) -27.8%

• Dassault Systemes (DSY.PA) -28.1%

• Shift4 Payments (FOUR) -30.6%

• Adobe (ADBE) -30.6%

Total: -10.7%

Business performance review

The stock price tells a story, let’s identify the business performance for each stock and I will share my vision on each stock

1. Adobe

Investment thesis 🟢

Record Q1 2026 results showed 12% revenue growth, with AI-first ARR more than tripling. Despite this strong performance, the PE multiple compressed from 19x to below 13x. Software stocks remain under pressure, largely driven by concerns around the AI narrative. In my view, this reflects a misunderstanding of how AI will ultimately be monetized (through deep integration into enterprise workflows rather than displacement)

2. Bonesupport

Investment thesis 🟢

The company reported impressive 36% constant currency growth (40% in the US), maintaining a massive 92.5% gross margin. PE remains high (41x) which can seem high but the PEG is now 0.4

3. Clinuvel

Investment thesis 🟢

Achieved its highest first-half sales in company history, but profit was temporarily squeezed by a 22% intentional increase in R&D and clinical trial spending. PE is under 14x

4. Dassault Systemes

Investment thesis 🟠

Reported solid recurring revenue, but investor sentiment weakened following conservative 2026 guidance of just 3–5% growth. The deceleration raises questions, but appears driven less by structural weakness and more by near-term dynamics: cautious enterprise spending, with a significant portion of budgets being redirected toward AI proofs of concept, and an ongoing transition from on-premise licenses to recurring revenue models. I remain positive for the same reasons as Adobe

5. Diaceutics

Investment thesis 🟢

Successfully returned to profitability with 20% revenue growth and a record order book, proving their platform’s scalability.

6. DLocal

Investment thesis 🟢

TPV (Total Payment Volume) surged 70% YoY, though the stock fell as the company guided for margin pressure in early 2026 due to expansion costs and lower take rate - which is absolutely normal.

7. InPost

Investment thesis 🟢

Handled a record 1.4 billion parcels in 2025 (+25%); outperformance is currently driven by its status as a takeover target.

8. Mercadolibre

Investment thesis 🟢

Revenue exploded 45% YoY to $8.8B, but the stock dipped as strategic investments in free shipping and logistics caused a slight earnings miss. Growth should remain high in the coming quarters.

9. Novo Nordisk

Investment thesis 🟠

Results were in line (Wegovy sales up 41%), but cautious 2026 guidance regarding price competition led to a sharp valuation cool-off. Newsflow remains negative. Revenue in 2026 should decrease despite the success of the recent weight loss pill launch.

10. Paypal

Investment thesis 🔴

The recent quarterly report was the most challenging for our 2026 list. While I expected a transition year, the 2026 guidance was a severe reset: management is now projecting negative-to-flat growth in transaction margin dollars and stagnant EPS. Competition continues to be strong. The main opportunity lies in the 8.5x PE. This extremely low valuation allows to aggressively buyback shares.

11. Shift4 Payments

Investment thesis 🟢

Shift4 is caught in a macro storm. Despite a 34% surge in revenue and hitting a record $171M in quarterly adjusted FCF, the stock was dragged down by a sector-wide sell-off in payments and a conservative 2026 EPS guidance that spooked short-term traders. The most telling data point this quarter was not in the earnings deck, but in the SEC filings. Founder and CEO Jared Isaacman showed his conviction by purchasing millions of dollars worth of stock on the open market following the dip.

12. Uber

Investment thesis 🟢

A fundamental powerhouse with $2.8B in quarterly FCF and 22% trip growth, proving it is now a mature, high-margin compounder. I don’t believe robotaxis will be an issue and I explained it in the article below.

Conclusion

Patience is the ultimate quality filter. While I am the first to admit that this Top 12 list has not delivered the outperformance I targeted for the start of 2026, I remain steadfast in the underlying math. Quality investing is not about chasing short-term green on a screen, it is about owning the best business engines in the world and letting them compound.

As we move into Q2, I see 3 reasons for optimism:

• The AI phase 2 rotation. We are nearing the end of the initial AI Hardware hype cycle. As the market shifts its focus from who builds the chips to who monetizes the workflow, I expect a significant renewal of interest in software leaders like Adobe and Dassault Systèmes. Their massive installed bases and deep integration into enterprise workflows are their ultimate moats

• Growth in a slowdown. In a cooling macro environment, scarcity of growth becomes a premium. Companies like Uber, Diaceutics, Bonesupport or dLocal are still growing at clip rates that far outpace the broader economy. As other companies stall, the market may rotate back to these high-velocity compounders

• Renewed investment thesis. For most companies in this list, the core fundamentals and long-term narratives remain intact. As a result, despite short-term volatility, they are likely to perform well over the long run

The scoreboard says we are trailing. The engine room says we are gaining ground. In the world of Quality, I will bet on the engine every time. The year is far from over.

In today’s selection, I am applying a strict anti-hype framework to separate the value traps from the opportunities:

• Valuation. A 2026 Forward PE strictly under 15x

• Top-line resilience. Zero projected revenue decline (growth may slow, but never turns negative)

• Consistent profitability. Positive net margins with a 5-year track record of staying in the black

While a low PE ratio is our entry point, I never invest based on a single metric. To separate true quality from value traps, I am putting each candidate through a multi-dimensional stress test. We will dissect the revenue trajectory and the PEG. Most importantly, we will look at the quality DNA: capital efficiency metrics like ROIC and ROE to ensure these companies are more than just cheap.

Many of these are currently falling knives. Even for a contrarian investor, caution is a virtue. I cannot emphasize enough the importance of using buy zones, staggered entries and sound money management to avoid the average down trap. Let’s look at the 10 candidates currently on sale!

1. Paycom (PAYC)

Paycom is the poster child for the AI-threatened category. Despite market fears that automated payroll will erode their moat, they delivered 9% revenue growth in 2025 and are guiding for a resilient 2026. With a forward PE now hovering under 15x and adjusted EBITDA margins at a staggering 43%, the business remains a high-ROIC cash cow that is simply out of favor.

📈 2026 revenue growth 6.6%

💎 2026 net profit margin 21.0%

💰 2026 PE 14.8x / 2026 PEG 3.0 (due to margin decrease, it should be closer to 1.5 in 2027)

🏆 ROIC 26.2% / ROE 27.4%

2. Accenture (ACN)

Accenture is currently being priced for a consulting winter, trading at a rare under 15x PE. While the market frets over slowing enterprise spend, Accenture's advanced AI bookings just hit $2.2B, proving that consulting may not be dead.

📈 2026 revenue growth 6.0%

💎 2026 net profit margin 11.4%

💰 2026 PE 14.7x / 2026 PEG 1.4

🏆 ROIC 19.7% / ROE 25.3%

3. Adobe (ADBE)

In a dramatic narrative shift, the market has treated Adobe as an AI casualty rather than an AI leader, pushing its PE down to a historic 13.6x. However, the fundamentals tell a different story: subscription revenue grew 13% last quarter and operating cash flows are at record highs. Adobe remains the toll bridge of the creative economy, maintaining 90%+ gross margins while the market prices it like a legacy hardware firm.

📈 2026 revenue growth 9.6%

💎 2026 net profit margin 28.4%

💰 2026 PE 13.6x / 2026 PEG 1.4

🏆 ROIC 37.1% / ROE 55.3%

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4. Wolters Kluwer (WKL.AS)

A European quality titan, Wolters Kluwer fits your criteria perfectly with 2026 high single-digit EPS growth. As a provider of must-have information for the legal and healthcare sectors, their 83% recurring revenue makes them nearly immune to the macro cracks showing elsewhere. Trading near 13x PE, it is the definition of a boring compounder on sale.

📈 2026 revenue growth 2.2%

💎 2026 net profit margin 18.7%

💰 2026 PE 13.0x / 2026 PEG NS (for 2026 due to EPS decrease, should be around 1.1 in 2027)

🏆 ROIC 23.2% / ROE 111%

5. Evolution (EVO.ST)

Evolution dominates the live casino market with a moat built on technical complexity and scale. Despite being a high-margin monster with a ROIC above 25%, it trades at a forward PE of 11x due to regulatory noise in its markets. 0 debt and above 48% net profit margin.

📈 2026 revenue growth 3.9%

💎 2026 net profit margin 48.7%

💰 2026 PE 11.1x / 2026 PEG 1.9

🏆 ROIC 25.8% / ROE 26.4%

6. Halozyme (HALO)

Halozyme is a high-margin royalty machine, projecting 23-30% revenue growth in 2026 as their drug-delivery tech becomes the industry standard. With a PE that has dipped into the 7x - 8x range, it offers biotech growth with boring infrastructure stability. Their royalty-based model ensures positive net margins that have remained robust through every cycle of the last 5 years.

📈 2026 revenue growth 25.7%

💎 2026 net profit margin 56.5%

💰 2026 PE 7.3x / 2026 PEG <0.1

🏆 ROIC 16.2% / ROE 153.6%

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7. Deckers Outdoor (DECK)

The parent of HOKA and UGG is a rarity: a high-growth brand trading at a value multiple of 14x. While the market fears a consumer slowdown, HOKA revenue is still growing at a mid-teens clip. Deckers has a clean balance sheet with zero debt and around $2B in cash, allowing them to aggressively buy back shares (over $1B planned for 2026) while the market is distracted by macro fears.

📈 2026 revenue growth 9.0%

💎 2026 net profit margin 18.5%

💰 2026 PE 14.6x / 2026 PEG 1.7

🏆 ROIC 33.9% / ROE 39.7%

8. Lululemon (LULU)

Lululemon has transitioned from a hype stock to a quality value play. After a 2025 correction, it now trades near 12x earnings, a level unthinkable 2 years ago. Despite the cracking market, Lulu maintains industry-leading margins and a 30% ROIC

📈 2026 revenue growth 4.2%

💎 2026 net profit margin 14.1%

💰 2026 PE 12.1x / 2026 PEG NS (for 2026 due to margin contraction. It is expected to be 1.3 in 2028)

🏆 ROIC 29.6% / ROE 41.0%

9. PDD (PDD)

PDD (Temu) is the quality vs sentiment battleground. Trading at a staggering 8.8x PE despite triple-digit historical growth, the market is pricing in extreme geopolitical risk. However, with a net profit margin that has stayed positive and grown consistently and a cash pile that could buy back half the company, it fits the specific criteria of your screen for those willing to stomach the volatility.

📈 2026 revenue growth 9.9%

💎 2026 net profit margin 23.8%

💰 2026 PE 8.8x / 2026 PEG 0.7

🏆 ROIC 23.6% / ROE 30.5%

10. Expedia (EXPE)

Expedia has spent the last year retooling its tech stack and AI integration and 2026 is projected to be the year of margin expansion (targeting 100-125 bps increase). Trading around 14x forward earnings, it is significantly cheaper than Airbnb or Booking.com, offering a QARP entry into the travel sector with a raised 20% dividend as a sign of management's confidence.

📈 2026 revenue growth 8.1%

💎 2026 net profit margin 12.5%

💰 2026 PE 14.1x / 2026 PEG 0.2

🏆 ROIC 16.8% / ROE 91.1%

Let’s discuss in the comments

I want to hear from you. The anti-hype list is built on being a contrarian and that usually comes with some healthy debate.

• Which of these 10 do you think is the biggest value trap and why? Is there a stock I missed that fits the sub 15x PE and high-quality criteria?

• Are you buying the dip on the AI-threatened names like Paycom and Adobe or are you staying on the sidelines?

Drop your thoughts below. I will be jumping into the comments to discuss the bull and bear cases for this selection!

Despite the localized pain, I believe this is not the time for aggressive buying. Several red flags suggest further turbulence ahead: a deteriorating geopolitical landscape, softening employment statistics and the fact that major indices remain near ATH despite the underlying volatility. This setup often precedes a broader market correction.

This article identifies 10 high-quality stocks that are entering compelling Buy Zones. These companies possess elite structural features (such as industry-leading ROIC and dominant market shares) that make them ideal candidates for a long-term watchlist.

However, discipline is paramount. For most of these names, I recommend a staggered entry strategy. By defining clear buy zones and managing your position sizes, you protect yourself against the market’s ability to surprise even the most seasoned investors by how low it can go.

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To maintain objectivity, I have applied the Quality Stocks Investment Framework to each company on this watchlist. For every ticker, I provide a data-driven breakdown across 3 core pillars:

• The Quality Scorecard. A proprietary rating of Growth (both revenue and EPS), Quality (margin, balance sheet and capital efficiency), and Valuation (PE, PEG, FCF yield)

• Fair Value & TSR Projection. My calculation of the Intrinsic Value and the projected Total Shareholder Return (TSR) based on current market hypotheses and conservative terminal multiples

• Strategic Buy Zones. Specific price levels where the risk/reward profile becomes asymmetric. These are designed for the staggered entry strategy mentioned above

New to the Framework? To see the full methodology behind my Investment Framework, you can read the article just below

Stock #1 - S&P Global (ticker SPGI)

S&P Global has recently faced a significant valuation reset, with the stock dropping approximately 22% in February 2026. This sell-off was primarily triggered by conservative 2026 guidance missing analyst expectations and a slight Q4 earnings miss. Despite this short-term indigestion, the opportunity lies in the strength of its oligopoly: over 95% of its revenue is tied to proprietary benchmarks and its high-margin Indices and Ratings divisions continue to grow at double-digit rates. With the stock’s forward PE compressing to nearly 25x (well below its 5-year average of 31x) and an upcoming spin-off of its Mobility segment designed to unlock further value, SPGI remains a quality compounder

Current price: $452

Quality Stocks Investment Framework

• Growth score: 76/100 🟢

• Quality score: 60/100 🟢

• Valuation score: 23/100 🟠

• Checklist:

  • Acquisition: YES 🟢

  • Recurring revenue: YES 🟢

  • Increasing margin: STABLE 🟠

  • Market share gain: YES 🟢

  • No (or low) dilution: YES 🟢

  • Risk level: MEDIUM 🟠

• Fair price: $464

• Buy zones: $410 / $340 / $290

Stock #2 - Mastercard (ticker MA)

Mastercard remains a strong asset-light compounder, but early 2026 has introduced a rare moment of price indigestion. The stock has pulled back roughly 15% from its recent highs. This correction was fueled by a mix of sector re-pricing as investors rotated out of high-multiple fintech names and renewed noise regarding the Credit Card Competition Act (CCCA).

However, the Quality case for Mastercard remains structurally strong. In its most recent Q4 2025 report, the company delivered an 18% revenue beat and a staggering 57.7% adjusted operating margin. Unlike banks, Mastercard takes zero credit risk, it simply collects a toll on the global shift toward digital and cross-border payments. With a Return on Equity (ROE) exceeding 170% and value-added services (cybersecurity and data) now growing at 22%, the current dip has compressed its forward PE to approximately 27x. This is significantly below its 5-year average of 33x.

Current price: $522

Quality Stocks Investment Framework

• Growth score: 97/100 🟢

• Quality score: 89/100 🟢

• Valuation score: 38/100 🟠

• Checklist:

  • Acquisition: YES 🟢

  • Recurring revenue: YES 🟢

  • Increasing margin: YES 🟢

  • Market share gain: YES 🟢

  • No (or low) dilution: YES 🟢

  • Risk level: LOW 🟢

• Fair price: $515

• Buy zones: $490 / $440 / $365

Beyond these 2 titans, the full watchlist features 8 additional Quality names spanning across the globe and multiple strategic sectors. These companies represent the elite 1% of the global market. Each has been selected because its structural moat remains strong despite the recent 2026 volatility, offering a diversified spread of opportunities for those looking to add quality stocks to their watchlist during this correction

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However, some of the most resilient and profitable compounding machines in history operate far away from the headlines. These are the boring businesses: the companies that manage our waste, certify our food safety, supply industrial gases or maintain the elevators in our cities. They don’t seek to disrupt the world, they simply provide the invisible infrastructure that allows the world to function.

The beauty of the boring thematic selection lies in its inherent defensibility. While a lot of companies must constantly innovate to avoid obsolescence, a landfill owner or a pest control leader benefits from the Lindy Effect (the idea that the longer a business model has already survived, the longer it is likely to persist).

The 16 companies I highlight in this article share a specific DNA: relatively high barriers to entry, pricing power through essential services and a defensive side to generate predictable free cash flow regardless of the macroeconomic climate.

For paid subscribers, we take the analysis one step further. Beyond identifying individual stock ideas, I apply the full Quality Stocks Investment Framework, including thematic screeners based on the Quality Stocks Score, fair value estimates, detailed Total Shareholder Return (TSR) breakdowns, defined buy zones and my investment verdict (Attractive / Conditional / Unattractive). This added layer is designed to bridge the gap between high-level insights and actual execution, helping long-term investors make more disciplined and risk-aware decisions.

Out of the 16 stocks analyzed in this article:

• 7 receive a MODERATELY ATTRACTIVE verdict, reflecting solid fundamentals overall, though with some limitations such as valuation, risks or execution considerations

• 9 receive a CONDITIONAL verdict, where the core business appears sound but one or two notable concerns (like debt, risk or valuation) temper the investment case

If you enjoy Thematic Selections, be sure to check out the latest edition on Enterprise Software

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5 elements commonly found in boring stocks

In this section, I outline 5 elements commonly found in boring stocks. Not every boring stock will exhibit all 5 characteristics. While their business models may appear simple or unexciting at first glance, I will also explore the deeper qualities that make these companies compelling investments.

1. The defensive moat

The primary characteristic of a boring stock is often non-discretionary demand. You can delay a software seat expansion or a new marketing campaign, but you cannot delay a broken elevator, a pest infestation or medical sterilization.

• Lindy effect. These businesses benefit from the principle that the longer a non-perishable thing has lasted, the longer it is likely to last. A company like Air Liquide (founded in 1902) has survived world wars, depressions and digital revolutions because the world will always need industrial gases

• Low disruption risk. Boring industries rarely face Uber moments. The barriers to entry are often physical, regulatory or geographic

2. Serial acquirers

Some names in my selection, such as Halma, Cintas, Rollins or WW Grainger, are master “Serial Acquirers.” They operate in highly fragmented industries where they can buy small, family-owned competitors at low multiplesand fold them into their superior global distribution network.

• The flywheel. They use their free cash flow to fund these acquisitions without needing to issue new equity

• Decentralization. Successful boring compounders often leave the acquired companies alone, maintaining the local relationships that made the small business successful while providing the parent company’s balance sheet strength

3. The debt paradox

In some sectors, debt is often a red flag. In the boring world, it is a necessary tool.

• Predictable cash flows. Because companies like American Water Works, Veolia or Waste Management have such predictable revenue (often backed by long-term contracts or regulatory monopolies), they can safely carry higher debt loads than a cyclical tech firm

4. Redefining profitability

One of the most common mistakes investors make is dismissing boring stocks because their Return on Invested Capital (ROIC) or Return on Equity (ROE) looks low (sometimes around 8–12%) compared to a capital-light stocks (30%+). A paradox: you will see that some “Quality Scores” in my Quality Stocks Investment Framework are low: this is usually not an issue for boring stocks.

• Asset heavy is a moat. For companies like Air Liquide or Veolia, their huge assets (pipelines, plants, treatment centers) are the very thing that prevents competitors from entering

• The replacement cost. When a company has billions in old assets on the books at historical cost, the real cost for a competitor to replicate that infrastructure today would be astronomical

• Steady reinvestment. A boring stock with a 10% ROIC that can reinvest 100% of its cash for 30 years is often a better investment than a tech company with a 50% ROIC that has nowhere to put its money after year three

Note that some boring stocks have exceptional ROIC like W.W. Grainger or Rollins.

5. The quality premium

Because these 16 stocks offer bond-like predictability with equity-like upside, the market rarely puts them too low.

• Low beta. They tend to fall less during market crashes, which leads to a valuation floor

• The cost of certainty. Investors are willing to pay a premium (high P/E) for the peace of mind that earnings will be higher 10 years from now

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The 16 picks

I have categorized my 16 picks into 4 distinct buckets, each representing a boring but quality segment.

You will see that this selection is diversified in terms of sectors, business models and countries.

Group 1: Hygiene & Waste

These companies provide services that are non-discretionary. You can delay a software upgrade, but you cannot delay trash collection or pest control

• Waste Management. The ultimate landfill moat

• Rollins. The pest control giant with massive recurring revenue and pricing power

• Ecolab. Essential hygiene and water treatment services for hospitals and hotels

• Tristel. Specialized chlorine dioxide disinfectants for medical instruments

Group 2: The Critical Industrial Supply Chain

These firms are the hidden partners to industry. Without their supplies, global manufacturing halts.

• Air Liquide. Industrial gases sold via long-term contracts

• Fastenal. High-touch distribution of industrial parts through on-site vending

• W.W. Grainger. The leader in maintenance, repair and operations (MRO) supplies

Group 3: Specialized Niche Monopolies

Dominating a specific, unglamorous category where they are the default choice

• Viscofan. The world leader in meat casings (a market most investors never consider)

• Symrise. Flavors and fragrances that are a tiny % of a product’s cost but define its brand

• Service Corporation. Death care and funeral services, a strong recession-proof business

• Cintas. Uniform rentals and facility services with a massive route density advantage

• Coloplast. Chronic care products (ostomy/urology) with extremely high switching costs

• MSA Safety. Life-saving safety equipment for different industries

• Halma. A conglomerate of niches focused on hazard detection and life protection

Group 4: Essential Infrastructures

Regulated, asset-heavy businesses that provide the fundamental necessities of modern civilization.

• Veolia. A global leader in water and waste management with high regulatory barriers

• American Water Works. A regulated utility with predictable growth and a wide moat

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Unlock the Full Analysis. For each of the 16 stocks, I apply the Quality Stocks Investment Framework in full:

• Quality Score-based screener

• Fair value estimates & detailed Total Shareholder Return (TSR) breakdowns

• Defined buy zones

• And a clear investment verdict: Attractive, Conditional or Unattractive

This is where insights turn into action. Here is a preview of the full Quality Stocks Investment Framework in action, featuring a detailed example

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In software, enterprise platforms are well positioned to become AI enablers. While business models may need to evolve, many of these companies have the potential not only to adapt, but to emerge stronger and create incremental value.

In this edition of Thematic Opportunities, we examine the risks and opportunities AI presents for the enterprise software sector. We also highlight 21 stocks that stand out for their positioning, resilience or long-term potential.

For paid subscribers, we take the analysis one step further. Beyond identifying individual stock ideas, I apply the full Quality Stocks Investment Framework, including thematic screeners based on the Quality Stocks Score, fair value estimates, detailed Total Shareholder Return (TSR) breakdowns, defined buy zones and my investment verdict (Attractive / Conditional / Unattractive). This added layer is designed to bridge the gap between high-level insights and actual execution, helping long-term investors make more disciplined and risk-aware decisions.

Out of the 21 stocks analyzed in this article:

• 3 receive a HIGHLY ATTRACTIVE verdict, indicating strong fundamentals and a valuation that offers a compelling long-term entry point

• 7 receive a MODERATELY ATTRACTIVE verdict, reflecting solid fundamentals overall, though with some limitations such as valuation, risks or execution considerations

• 8 receive a CONDITIONAL verdict, where the core business appears sound but one or two notable concerns (like debt, risk or valuation) temper the investment case

• 2 receive a MODERATELY UNATTRACTIVE verdict, due to meaningful weaknesses or an elevated valuation despite solid fundamentals, making patience for a better entry point advisable

• 1 receive a HIGHLY UNATTRACTIVE verdict, with significant fundamental, valuation or structural issues that make the risk-reward profile unfavorable at this time

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The AI threat

Concerns around software stem from the idea that AI could fundamentally reshape how business applications are built, used and priced. Large language models and AI-native tools lower development barriers, enabling new entrants to replicate core features faster and at lower cost, potentially compressing pricing power.

At the same time, AI copilots may reduce seat-based usage by automating tasks previously performed by human users, challenging traditional per-seat SaaS models. There is also a risk of disintermediation, where AI layers sit on top of existing software stacks, capturing value while relegating incumbent platforms to commoditized infrastructure.

Combined with uncertainty around data ownership, model integration costs and return on AI investments, these dynamics have fueled fears that enterprise software’s historically strong moats could weaken in an AI-driven world.

A more balanced view

A more balanced view suggests that AI is unlikely to be an existential threat to enterprise software. While AI can automate tasks and accelerate feature development, it does not replace the complexity of enterprise workflows, regulatory requirements, security constraints and deep system integrations (complex IT architecture) that companies manage.

Enterprise software vendors control the data, distribution and trust relationships that AI models need to operate at scale. Additionally the main processes of the company are based on these software making impossible to collaborate without them.

In practice, AI is being embedded as an enhancement (improving productivity, decision-making and automation) rather than eliminating the need for core platforms. Although pricing models may evolve, the mission-critical nature of these systems and their high switching costs suggest that value is more likely to shift within enterprise software ecosystems than to disappear.

Final point: one of the key challenges companies face when implementing AI is that many proof of concepts are promising but remain disconnected from core business processes. This highlights the need to rely on existing enterprise systems (enhanced by AI) rather than standalone AI tools that fail to scale across the organization.

What from now

What we are also observing is a familiar pattern seen in every sector at some point: valuations became extremely elevated as the narrative turned overwhelmingly bullish. Eventually, fundamentals reassert themselves, and valuations normalize.

Further downside remains possible, which is precisely why this phase is better suited to building a watchlist than rushing to deploy capital. Identifying the highest-quality companies and defining attractive entry points is central to the Quality Stocks Investment Framework.

21 stocks

• HR Software (HCM): Automatic Data Processing, Paychex, Paycom

• Engineering, Design, Construction & PLM: Nemetschek, Dassault Systemes, Autodesk

• Cybersecurity: Fortinet, Palo Alto Networks, Qualys, Crowdstrike

• Customer Relationship: Salesforce

• Supply Chain: SPS Commerce

• Semiconductor: Synopsys, Cadence Design

• Data: Snowflake, Palantir

• Life Sciences: Veeva

• Digital Marketing: Adobe

• Core Enterprise Platform: SAP, Servicenow, Tyler Technologies

Unlock the Full Analysis. For each of the 21 stocks, I apply the Quality Stocks Investment Framework in full:

• Quality Score-based screener

• Fair value estimates & detailed Total Shareholder Return (TSR) breakdowns

• Defined buy zones

• And a clear investment verdict: Attractive, Conditional or Unattractive

This is where insights turn into action. Here is a preview of the full Quality Stocks Investment Framework in action, featuring a detailed example

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But are those fears justified? Or has the market overcorrected, mispricing companies with strong (or at least decent) fundamentals?

In this edition of Thematic Opportunities, we explore seven sectors that have sold off due to AI-related concerns, breaking down:

• How each industry is thought to be at risk from AI

• Whether those threats are grounded in reality or exaggerated by narrative

• And several stock ideas within these sectors (20)

Rather than take the AI story at face value, we aim to test the assumptions baked into current prices and see if fear has outpaced fundamentals.

For paid subscribers, we take the analysis one step further. Beyond identifying individual stock ideas, I apply the full Quality Stocks Investment Framework, including thematic screeners based on the Quality Stocks Score, fair value estimates, detailed Total Shareholder Return (TSR) breakdowns, defined buy zones and my investment verdict (Attractive / Conditional / Unattractive). This added layer is designed to bridge the gap between high-level insights and actual execution, helping long-term investors make more disciplined and risk-aware decisions.

Out of the 20 stocks analyzed in this article:

• 2 receive an ATTRACTIVE verdict, meaning their fundamentals are solid and the current price offers a compelling long-term entry point (even if waiting for the ideal buy zone could slightly improve return potential)

• 11 receive a CONDITIONAL verdict, where the core business is reasonably sound but 1 or 2 notable concerns (such as elevated debt, execution risk or a stretched valuation) temper the investment case. These may be worth monitoring or sizing carefully

• 7 receive an UNATTRACTIVE verdict, with fundamental weaknesses or structural challenges that make the investment case too risky under the current conditions

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1. Call Centers

Stocks to watch: Teleperformance (TEP.PA), Concentrix (CNXC)
Risk verdict: ⚠️⚠️ (Moderate risk)

Call centers remain a focal point for AI-driven efficiency gains rather than outright obsolescence. While generative AI excels at routine inquiries, real-world adoption shows hybrid models dominating: Gartner estimates only 10% of agent interactions will be fully AI-conducted by 2026, with humans handling complex, emotional or regulated cases.

Companies like Teleperformance and Concentrix are aggressively integrating AI. Teleperformance expanded its digital suite with AI modules covering over 62% of operations and Concentrix launched conversational AI boosting resolution accuracy by 48%.

This augmentation reduces costs and improves productivity (15-20% gains reported), pressuring headcount but creating an opportunity margin expansion. The global market should continue to grow at 6% annually through 2035. Risks persist from over-reliance on AI in low-nuance segments, but leaders evolving into AI-enabled platforms could resist.

2. IT Consulting Services

Stock to watch: Accenture (ACN), Capgemini (CAP.PA)
Risk verdict: ⚠️ (Low risk)

IT consulting faces short-term disruption from AI automating code generation and basic analysis, but it is emerging as a major beneficiary. Firms like Accenture recorded almost $1B in gen AI bookings in recent quarters, launching dedicated AI units and partnering with OpenAI to upskill tens of thousands of employees.

AI creates demand for transformation services: embedding AI in workflows, agentic systems and reinvention programs. Growth may moderate from pre-AI peaks, but margins expand via leveraged delivery and new revenue from AI assets. Accenture’s reinvention focus (merging divisions into AI-enabled services) exemplifies the pivotturning potential disintermediation into opportunity. Long-term, consultancies with scale and ecosystem ties could perform decently.

3. HR, Staffing & Recruitment

Stocks to watch: Adecco (ADEN.SW), Randstad (RAND.AS)
Risk verdict: ⚠️⚠️⚠️ (High risk)

Here, the AI narrative overlaps with a challenging macro backdrop: slowing labor markets, wage pressures and rising automation fears. The key concern is that generative AI will automate core HR functions (such as sourcing, screening, and onboarding) reducing companies’ reliance on external staffing and recruitment providers.

But while hiring volume may shift, the broader role of these firms as talent enablers and workforce managers may remain resilient but AI might indeed seriously impact their business models.

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4. Professional Data & Information Services

Stocks to watch: Wolters Kluwer (WKL.AS), RELX (REL.L), FactSet Research (FDS)
Risk verdict: ⚠️⚠️ (Low to moderate risk)

Fears of commoditization by free LLMs overlook deep moats: proprietary datasets, workflow integration and regulatory trust.

Companies like RELX allocates 70% of R&D to AI/data enhancing analytics. Wolters Kluwer embeds expert AI in compliance/tax tools, positioning curated content as premium in an AI world.

Gen AI may boost usability/personalization. Additionally demand might grow for trusted sources amid misinformation. Switching costs and specialization (healthcare, finance) protect pricing. Some stock dips reflect overhyped fears, but earnings acceleration from AI tools suggests net positive.

5. Software & SaaS

Stocks to watch: Adobe (ADBE), Dassault Systèmes (DSY.PA), Salesforce (CRM), Docebo (DCBO.TO), HubSpot (HUBS), Atlassian (TEAM), ServiceNow (NOW)
Risk verdict: ⚠️ (Low risk)

Software might seem like the AI winner, not the loser but not all software is created equal. Investors have grown cautious toward firms whose value propositions could be replicated or replaced by AI-native challengers.

For example, Adobe faced fears that generative design tools would cannibalize its creative suite. Salesforce and HubSpot are navigating a world where AI could automate large portions of CRM workflows. Others, like Docebo or Atlassian, are adjusting to tighter SaaS spending and uncertain AI monetization.

But the key question is moat. Companies with embedded customer relationships, strong platforms, that are integrated in complex IT architecutres and have proprietary data stand to benefit by embedding AI into their product layers rather than being displaced by it.

The challenge is separating the durable from the vulnerable and the overpriced from the mispriced.

6. Education Technology & Learning Platforms

Stocks to watch: Chegg (CHGG), Pearson (PSON.L)
Risk verdict: ⚠️⚠️⚠️ (High risk)

Few sectors have been hit harder by the rise of generative AI than education. Chegg’s stock famously collapsed after the company acknowledged that ChatGPT was cannibalizing its core homework help services. Investors quickly extrapolated this to the broader sector, fearing that AI could render guided learning platforms obsolete.

As a result, I remain broadly cautious on the space. While some players may successfully pivot toward AI-enhanced learning, the current business model of many incumbents faces real structural pressure. Unless firms pivot toward AI-enhanced learning systems, personalized tutoring or credentialed content, they risk being outpaced by free or cheaper alternatives.

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7. Media, Publishing & Content

Stocks to watch: Shutterstock (SSTK), Getty Images (
Risk verdict: ⚠️⚠️⚠️ (High risk)

This sector may be one of the clearest case of AI disintermediation: image-generation tools like DALL·E and Midjourney directly threaten stock image providers by offering free or low-cost alternatives to licensed content.

In response, firms like Shutterstock and Getty have partnered with AI providers, created ethical licensing agreements and developed platforms to serve both AI and traditional creators. Still, the pricing power and volume dynamics of the stock image market may be permanently altered.

Unlock the Full Analysis. If you want to separate AI reality from AI noise and want a framework to navigate today’s volatile narratives, the paid section delivers the next layer of insight. For each of the 20 stocks across these 7 sectors, I apply the Quality Stocks Investment Framework in full:

• Quality Score-based screener

• Fair value estimates & detailed Total Shareholder Return (TSR) breakdowns

• Defined buy zones

• And a clear investment verdict: Attractive, Conditional or Unattractive

This is where insights turn into action. Whether you are looking for hidden compounders mispriced by fear or trying to avoid structurally challenged traps, this framework is built to help you.

Here is a preview of the full Quality Stocks Investment Framework in action, featuring a detailed example of Accenture

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For 2026, I have again selected 12 stocks that I believe offer compelling potential. Here is how they were chosen:

• A strong score in my Quality Stocks Investment Framework

• A reasonable valuation

• Trading close to identified buy zones

• Positive upside driven by my outlook and convictions for 2026 (you can find the related article here)

As with previous selections, please note that this is not my portfolio, but a curated list drawn from a broader universe of stocks. Some of these names are held in my portfolio, while others are not.

As every year, the list will be available for free. Paid subscribers, however, will also get access to an Excel file containing the full Quality Stocks Investment Framework for the 12 stocks: individual stock scores, fair value estimates, detailed projected TSR calculations with assumptions and clearly defined buy zones, everything needed to assess fit with their investment strategy and move from idea to execution.

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The strategy

For this year’s selection, I wanted to showcase a diversified mix of stocks spanning different market capitalizations, sectors and investment styles. Although choosing stocks at the start of the year is always somewhat symbolic (and often influenced by existing momentum), each name on this list has been selected with a long-term perspective in mind.

I also deliberately avoided AI-themed stocks. Last year’s selection was heavily concentrated in that area, which explains part of its strong performance. This time, I focused on quality companies trading at reasonable valuations, blending QARP and GARP investment styles. I believe valuation-heavy stocks face elevated risk today, while QARP and GARP approaches have historically delivered solid long-term returns.

This list diverges significantly from most mainstream selections: it is intentionally somewhat contrarian. Consider it an experiment in stock picking that stands apart from the prevailing Wall Street consensus.

What I like about this selection:

• Strong diversification

• Emphasis on GARP / QARP

• Attractive expected revenue and margin growth over the coming years

• Constructive technical setups for several stocks

Areas that may perform well this year but are not represented:

• No AI-themed names

• No defense stocks

• Limited exposure to healthcare / defensive growth

• No Chinese equities

• No allocation to cyclical or deep-value sectors such as automotive, chemicals or health insurance

• No exposure to capital-intensive businesses, which may outperform in a declining interest-rate environment

1. Adobe

Country: US
Sector: Technology
Ticker: ADBE

Link to my 2026 core convictions: AI monetization, reassessing stocks with overstated AI-disruption risk and long-term structural growth trends

2026 revenue growth: 9.5%
2026 PE: 19.3x
PEG: 1.3

Adobe’s valuation has compressed dramatically, falling from 50x earnings to below 20x, while the business has continued to grow at a solid pace (close to 10% per year). At the same time, Adobe is actively monetizing AI. While AI naturally introduces competitive risk, it also represents a significant incremental revenue opportunity. Adobe is particularly well positioned to capture this upside, as its AI tools are deeply embedded in customer workflows and tightly integrated into enterprise IT ecosystems making monetization both scalable and defensible.

2. Bonesupport

Country: Sweden
Sector: Healthcare
Ticker: BONEX.ST

Link to my 2026 core convictions: Healthcare

2026 revenue growth: 35.3%
2026 PE: 35.5x
PEG: 0.5

BoneSupport is one of the fastest-growing companies outside the AI space. The company develops injectable bone graft substitutes used primarily in trauma and infection-related orthopedic procedures, addressing a large and underpenetrated market. After falling roughly 50% in 2025, the stock now offers a more attractive entry point. While the valuation remains elevated on absolute terms, growth-adjusted metrics are compelling: the PEG ratio is expected to be around 0.2x in both 2026 and 2027, which is highly attractive given the company’s growth profile.

3. Clinuvel

Country: Australia
Sector: Healthcare
Ticker: CUV.AX

Link to my 2026 core convictions: Healthcare

2026 revenue growth: 7.4%
2026 PE: 17.4x
PEG: 1.1

A largely overlooked stock, Clinuvel develops innovative photoprotective therapies and is expanding into dermatology and cosmetics through its proprietary brand, opening up a significant new commercial opportunity beyond its core medical franchise. Looking ahead, analysts expect a sharp acceleration in growth from 2028, driven by the scaling of new indications and the broader rollout of its consumer-facing products (analysts are forecasting revenue growth of more than 60% in 2028 alone, a projection I view as optimistic). Despite this upside, the stock currently trades at a compelling valuation, cash is more than 30% the market cap and is supported by a strong technical setup, making the risk-reward particularly attractive.

4. Dassault Systemes

Country: France
Sector: Technology
Ticker: DSY.PA

Link to my 2026 core convictions: AI monetization, reassessing stocks with overstated AI-disruption risk and long-term structural growth trends

2026 revenue growth: 4.5%
2026 PE: 23.5x
PEG: 2.8

Dassault Systemes operates at the intersection of product development software and life sciences, with a strong presence in drug development. Its solutions are deeply embedded in customers’ core processes, creating high switching costs and durable competitive advantages. While growth is slowing, the revenue mix is steadily improving: like most leading software companies, Dassault Systemes is becoming increasingly subscription-based, driving higher visibility and recurring revenue. The company is now debt-free, providing capacity for bolt-on acquisitions. Its prior acquisition of Medidata being a strong example of successful capital allocation. Following a prolonged derating, the stock now trades close to an all-time low valuation.

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5. Diaceutics

Country: UK
Sector: Technology
Ticker: DXRX.L

Link to my 2026 core convictions: Healthcare and long-term structural growth trends

2026 revenue growth: 22.5%
2026 PE: 22.1x
PEG: 0.4

Diaceutics is a small-cap, largely overlooked company that provides data-driven solutions enabling pharmaceutical and diagnostics companies to identify, validate and commercialize precision-medicine tests. Operating in a highly specialized niche, the company delivers significant value to its customers by improving test adoption and patient identification. While Diaceutics is currently close to breakeven, profitability is approaching an inflection point. As operating leverage kicks in, net margins should begin to expand, creating a powerful double growth dynamic driven by both rising revenues and improving margins.

6. DLocal

Country: Uruguay
Sector: Finance
Ticker: DLO

Link to my 2026 core convictions: Long-term structural growth trends

2026 revenue growth: 31.0%
2026 PE: 16.5x
PEG: 0.4

DLocal provides cross-border payment solutions that enable global merchants to accept and process local payments in emerging markets. Beyond its strong growth profile at a reasonable valuation (partly reflecting the higher perceived risk of the countries in which it operates), the company offers attractive long-term exposure to structurally fast-growing economies, particularly across Latin America and Africa.

7. InPost

Country: Poland
Sector: Industrials
Ticker: INPST.AS

Link to my 2026 core convictions: Long-term structural growth trends

2026 revenue growth: 18.8%
2026 PE: 14.4x
PEG: 1.0

InPost operates a leading out-of-home parcel delivery network, centered on automated parcel lockers that serve e-commerce merchants and consumers. While the market has focused on concerns around rising competition and leverage, the company has continued to gain market share and the structural growth tailwinds supporting e-commerce logistics remain firmly intact. At current levels, the valuation also looks very reasonable relative to its growth and market position.

8. Mercadolibre

Country: Argentina
Sector: Consumer Cyclicals
Ticker: MELI

Link to my 2026 core convictions: Long-term structural growth trends

2026 revenue growth: 29.0%
2026 PE: 33.7x
PEG: 1.1

MercadoLibre operates the leading e-commerce and digital payments ecosystem in South America, combining online marketplaces, logistics and its fast-growing fintech platform, Mercado Pago. The stock offers a compelling way to gain exposure to long-term South American growth trends. That said, intensifying competition and a still-elevated valuation remain key risks to monitor.

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9. Novo Nordisk

Country: Denmark
Sector: Healthcare
Ticker: NVO

Link to my 2026 core convictions: Healthcare

2026 revenue growth: Flat
2026 PE: 14.4x
PEG: 1.9

Novo Nordisk is a global leader in diabetes and obesity care, with a dominant position in insulin and GLP-1 therapies. After a difficult 2025 (driven by concerns around competition, capacity constraints and reduction of growth expectations) the stock has undergone a meaningful correction. I believe most of the negative news is now largely priced in. Looking ahead, several potential catalysts could support both revenue growth and investor sentiment, including the launch of an oral GLP-1 treatment and continued expansion of the obesity market.

10. Paypal

Country: US
Sector: Finance
Ticker: PYPL

Link to my 2026 core convictions: Long-term structural growth trends

2026 revenue growth: 5.9%
2026 PE: 10.5x
PEG: 1.0

Paypal operates a global digital payments platform enabling consumers and merchants to transact online and in-store. In 2025, earnings per share grew by 28% despite the stock trading at a valuation below 12x earnings highlighting a meaningful disconnect between fundamentals and valuation. The company continues to grow earnings, supported by modest top-line expansion, improving margins, and aggressive share buybacks. While Paypal faces intensifying competition that is pressuring market share in parts of its core business, the group has opportunities to diversify into adjacent services, which could help reaccelerate growth over time.

11. Shift4 Payments

Country: US
Sector: Finance
Ticker: FOUR

Link to my 2026 core convictions: Long-term structural growth trends

2026 revenue growth: 24.7%
2026 PE: 18.9x
PEG: 0.8

Shift4 Payments provides integrated payment processing and point-of-sale solutions, primarily serving hospitality, entertainment and complex merchant verticals. The stock has come under pressure due to concerns around growth normalization, customer concentration, leverage and broader multiple compression across fintech. Despite these headwinds, the company continues to grow and gain market share. With the valuation now significantly more attractive, the risk/reward profile has improved meaningfully. That said, execution and competitive risks remain elevated, making this a higher-risk but potentially high-upside opportunity.

12. Uber

Country: US
Sector: Technology
Ticker: UBER

Link to my 2026 core convictions: Reassessing stocks with overstated AI-disruption risk and long-term structural growth trends

2026 revenue growth: 15.8%
2026 PE: 22.6x
PEG: 0.4

Uber has three key strengths. First, it is growing rapidly in large, structurally attractive markets. Second, its net profit margin is on a clear long-term upward trajectory, reflecting improving operating leverage and discipline. Third, Uber is gradually evolving into a “super app”, with new services and use cases that should support incremental revenue growth over time. Autonomous vehicles represent both an opportunity and a risk. However, I believe AVs are more likely to disrupt the driver layer rather than the platform itself, leaving Uber’s role as the intermediary connecting riders and sellers largely intact.

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Balance and metrics

As you can see, this selection offers a well-balanced exposure across multiple dimensions:

• Industries

  • Payments: DLocal, Paypal, Shift4 Payments

  • Software & Platforms: Uber, Dassault Systemes, Adobe

  • Healthcare: Clinuvel, Diaceutics, Bonesupport, Novo Nordisk

  • Logistics & E-commerce: MercadoLibre, InPost

• Geographic Exposure (United States: 4 / Australia: 1 / Sweden: 1 / Argentina: 1 / Uruguay: 1 / France: 1 / United Kingdom: 1 / Poland: 1 / Denmark: 1)

• Market Capitalization

  • Small-cap: Bonesupport, Clinuvel, Diaceutics, DLocal, InPost, Shift4 Payments

  • Large-cap: Adobe, Dassault Systemes, MercadoLibre, Novo Nordisk, Payal, Uber

Aggregate Portfolio Metrics (12 stocks average):

• Expected revenue growth: 18.9% per year

• Expected EPS growth: 28.3% per year

• 2026E PE: 20.6x

• PEG ratio: 1.06

• Net profit margin: 18.1%

• Balance sheet: net cash position (0.7x EBITDA)

• ROIC: 21.4%

• ROE: 34.2%

What are your thoughts on this selection? Share them in the comments below

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As I said previously, paid subscribers will get access to an Excel file containing the full Quality Stocks Investment Framework for the 12 stocks: individual stock scores, fair value estimates, detailed projected TSR calculations with assumptions and clearly defined buy zones, everything needed to assess fit with their investment strategy and move from idea to execution.

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Declining stocks with strengthening fundamentals deserve attention because business performance often turns before market sentiment does. In some cases, the business is performing well even as the stock remains depressed. While not every fallen stock is a bargain, identifying those where risk is decreasing (even as prices remain depressed) can tilt the odds in an investor’s favor.

In this article, I focus on 15 stocks that were heavily sold in 2025 but in the meantime show clear signs of fundamental improvement and revenue increase. I will present all of the stocks openly so every reader can follow the analysis and understand why each company made the list.

For paid subscribers, the approach goes one step further. Beyond individual stock selection, I provide access to the Quality Stocks Investment Framework applied systematically, including screeners built on the Quality Stocks scoring system, fair value assessments, detailed Total Shareholder Return (TSR) calculations, clearly defined buy zones and my overall verdict. This additional layer is designed to bridge the gap between fundamental analysis and execution, helping translate insights into disciplined, risk-aware investment decisions.

The 15 stocks

Of course, caution is still required for these 15 stocks. Their 2025 price declines often reflect genuine fundamental challenges, even if negative narratives sometimes follow the price action and overemphasize the downside.

1. Accenture (ACN)

• 2025 stock performance -23%

• 2025 growth 7.4%

• NTM PE 20.1x

The consulting market is facing a challenging environment, yet the sector leader continues to outperform peers. Strategic acquisitions are helping sustain growth at a solid level. At the same time, AI represents both a risk (through potential business disruption) and a significant opportunity (as clients increasingly seek support to implement AI solutions)

2. Adobe (ADBE)

• 2025 stock performance -20%

• 2025 growth 10.5%

• NTM PE 19.3x

The market remains concerned about AI-driven disruption, yet Adobe is already beginning to monetize its AI-enhanced offerings. Growth remains strong at close to 10%, while the valuation sits near all-time lows

3. Bonesupport (BONEX.ST)

• 2025 stock performance -53%

• 2025 growth 31.1%

• NTM PE 33.7x

Bonesupport has come under significant pressure following an exceptional 2024 performance, amid negative news flow, a short-seller report, and an unsustainably high valuation. Looking ahead, the 2026 PE implies a PEG ratio below 1, suggesting a potential opportunity if growth holds

4. Coloplast (COLO-B.CO)

• 2025 stock performance -31%

• 2025 growth 3.1%

• NTM PE 21.2x

The product recall continues to weigh on revenue growth and margins, but conditions should normalize over time, and the company retains strong defensive growth characteristics

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5. Deckers Outdoor (DECK)

• 2025 stock performance -49%

• 2025 growth 7.6%

• NTM PE 16.1x

lowing growth at its HOKA brand and broader concerns about the running shoe sector weighed on sentiment, yet the company continued to grow and gain market share

6. Factset Research (FDS)

• 2025 stock performance -39%

• 2025 growth 5.4%

• NTM PE 19.0x

The market also fears that AI could disrupt data providers such as Wolters Kluwer, RELX, or FactSet. Yet the company continues to grow, and its highly recurring business model provides strong visibility

7. InPost (INPST.AS)

• 2025 stock performance -38%

• 2025 growth 18.8%

• NTM PE 14.3x

The market worried about rising competition and margin pressure at InPost, yet the company continued to grow volumes and expand its network. PEG should be below 0.5x in 2026 and 2027

8. Novo Nordisk (NVO)

• 2025 stock performance -39%

• 2025 growth 5.9%

• NTM PE 14.6x

The Danish pharmaceutical giant cut its guidance several times in 2025, weighing heavily on the stock. Intensifying competition from Eli Lilly, potential US price pressure under a Trump administration, new market entrants and disappointment in Alzheimer’s clinical development made 2025 a difficult year. However, the company retains strong positives: the GLP-1 market continues to expand, oral GLP-1 treatments are nearing commercialization and net profit margins remain above 30%

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9. Paycom (PAYC)

• 2025 stock performance -21%

• 2025 growth 8.8%

• NTM PE 19.4x

The software sector outside of AI has been under significant pressure in 2025. The stock continued its decline, which began in late 2021, as growth slowed from around 20% to below 10%. However, growth remains solid and the company continues to gain market share

10. Paypal (PYPL)

• 2025 stock performance -30%

• 2025 growth 4.7%

• NTM PE 10.6x

Driven by margin improvement, share buybacks, and continued growth, EPS increased by 28% in 2025, an impressive result for a stock trading below 12x PE. For a rebound in 2026, the company will need to show renewed sales momentum by stabilizing market share and developing new revenue streams

11. Salesforce (CRM)

• 2025 stock performance -20%

• 2025 growth 8.7%

• NTM PE 36.6x

As with Adobe, fears of AI-driven disruption may be overstated. The company is progressing through a post–high-growth normalization phase and should continue to expand net profit margins, particularly by reducing share-based compensation, which still consumes a significant portion of free cash flow

12. Shift4 Payments (FOUR)

• 2025 stock performance -37%

• 2025 growth 26.0%

• NTM PE 18.8x

The market worried about slowing payment volumes, rising debt (due to acquisitions) and rising competition at Shift4 Payments, yet the company continued to grow revenue (organically and by acquisition) and expand its merchant base

13. SPS Commerce (SPSC)

• 2025 stock performance -50%

• 2025 growth 17.8%

• NTM PE 35.1x

The stock traded at a PE of 110x in 2023, another reminder that valuation matters and that normalization can be brutal. In 2025, concerns over slowing retail demand and customer budget pressure weighed on SPS Commerce, even as the company continued to grow its revenue by 18%

14. The Trade Desk (TTD)

• 2025 stock performance -67%

• 2025 growth 18.2%

• NTM PE 34.9x

The market now fears a slowdown in growth (previously close to 30%) along with rising competition, particularly from large incumbents. With the PE once above 300x, the stock is also undergoing a sharp normalization in valuation alongside the normalization in growth

15. Wolters Kluwer (WKL.AS)

• 2025 stock performance -45%

• 2025 growth 4.4%

• NTM PE 16.8x

A very similar story and setup to Factset

For readers who want to turn these ideas into real investment decisions, the paid subscription goes further. Paid subscribers get access to the full Quality Stocks Investment Framework applied to each stock including the score, fair value, projected TSR details, clearly defined buy zones and the overall verdict. All delivered in a clear and easy-to-use Excel spreadsheet. This turns a list of interesting ideas into a decision-ready toolkit, while also unlocking full access to all stock analyses, screeners, thematic selections and portfolio updates, so the framework can be applied consistently over time.

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You can find the full article here.

I will repeat the same exercise in a few days with my picks for 2026. But before doing so, and as the stock market year comes to an end, it is time to reveal, and more importantly analyze, how these 12 picks performed and why they delivered those results.

So without further ado, let’s dive in!

Overall Performance

In 2025, the portfolio delivered a 24.4% return excluding dividends, and approximately 24.6% including dividends. Notable, 2 stocks returned more than 100%.

For context, here is how several major indices performed over the same period:

• S&P 500 17.9%

• Nasdaq 22.1%

• Dow Jones 14.5%

• EuroStoxx 50 17.4%

• MSCI World 20.7%

After a strong start to the year marked by significant outperformance, the gap narrowed as 2025 progressed. The AI-driven rally benefited certain holdings, most notably KLA Corporation and Applied Materials, while broader market rotation weighed on other names, limiting their performance.

That said, in a year characterized by an exceptionally concentrated market advance, delivering nearly 7 percentage points of outperformance versus the S&P 500 highlights the overall success of this stock-picking exercise.

Quick performance analysis for each stock

1. Adobe

Adobe was one of the weaker performers, declining by 20.6% over the year. The primary reason is market concern that AI could materially disrupt its core business. Operationally, however, Adobe continued to execute well, delivering 10% revenue growth, 11% growth in recurring revenue, expanding margins, and ongoing share buybacks.

As a result of the sell-off, Adobe now trades at a forward PE of around 19x, compared with a 10-year average closer to 45x, while its free cash flow yield is approximately 7%.

While growth is naturally slowing as Adobe reaches greater scale and market penetration, I do not believe the company warrants such a depressed valuation for 2 key reasons. First, the risks associated with AI disruption appear overstated. Second, the majority of Adobe’s revenue is recurring, providing strong earnings visibility and resilience.

2. Adyen

2025 was a volatile year for Adyen, ending with a disappointing decline of around 5%. The slowdown in growth was widely expected, even if the market reacted as though it came as a surprise despite the company still forecasting growth above 20%.

As valuations normalize, Adyen continues to grow and gain market share, leaving the company well positioned for the long term. While 2025 was not its year, patience remains warranted.

3. 4. Applied Materials and KLA Corporation

With a gain of around 60% plus a small dividend, Applied Materials was one of the standout performers of the year, although it still trailed KLA Corporation, which delivered a total return of approximately 103% including dividends.

Both companies have emerged as clear beneficiaries of the AI investment cycle, supported by stronger order books. The market expects sustained demand for their equipment as semiconductor manufacturers expand production capacity to meet the surge in AI-related workloads.

That said, any meaningful slowdown in AI investment would have a significant impact on these businesses. For now, however, performance has been exceptional.

5. General Dynamics

At the end of 2024, I believed that the depressed valuations and slower growth across most US defense contractors were a temporary anomaly and that a catch-up would follow. That re-rating did occur, with General Dynamics delivering a 31% gain over the year.

6. Mercadolibre

MercadoLibre delivered solid operating performance this year, but valuation multiples compressed as the market moved toward normalization. Its PS declined from 4.1x to 3.5x, resulting in a still-respectable 17.5% return over the year.

The company remains well positioned to benefit from long-term growth in South America, even as competition intensifies with the continued expansion of Amazon in the region.

7. Merck&Co

I had intended to include several healthcare stocks in this selection, but 2025 proved to be a challenging year for the sector, despite a respectable rebound in Q4.

With a 7% return and a solid dividend, Merck&Co. did not act as a drag on performance. That said, healthcare may prove to be a more attractive thematic investment in 2026 than it was in 2025.

8. Paxman

Paxman faced two significant headwinds in 2025. First, integration costs related to the acquisition of Dignitana came in higher than expected, pushing net profit margins close to break-even and absorbing a substantial amount of management attention. Second, reimbursement pricing for its treatment proved materially lower than anticipated.

As a result, the stock declined 18% over the year. While 2026 could see an improvement, uncertainties remain, and the market continues to approach the stock with caution.

9. Shift4 Payments

Amid a broad sell-off across the payments sector, Shift4 Payments posted a sharp decline of approximately 37% in 2025. While net profit margins came under pressure, revenue still grew by 26%, an impressive pace for a company expected to trade at a forward 2026 PE of around 18x.

The market remained broadly skeptical toward the sector throughout 2025. Looking ahead, I believe conditions could be more favorable in 2026.

10. PDD

PDD delivered a 17% return, which is respectable but clearly at the lower end of Chinese equity performance, especially when compared with peers such as Alibaba, which gained more than 70% over the same period.

While the result was disappointing on a relative basis, valuation remains attractive, with a PE ratio close to 10x. Although growth has moderated, it is expected to remain robust (14% in 2026).

11. Transmedics

This was one of the standout successes of 2025, delivering a return of more than 103%. The result reflects two key factors.

First, a technical inflection point correctly identified at the end of 2024, marking the unwinding of a short-lived bubble phase. Second, fundamental strength, with consistent upward revisions to both revenue and margins throughout the year.

At this stage, valuation appears stretched, making a more cautious stance appropriate. The stock has also proven to be among the most volatile in the market, reinforcing the need for discipline going forward.

12. Uber

Uber delivered a 34% return in 2025 and remains one of my preferred US large-cap stocks. Valuation still appears reasonable relative to its long-term potential, with expected growth of around 16% in 2026 and a forward 2026 PE of approximately 22x.

The company also offers significant optionality, having built a large, multi-service platform. While autonomous vehicles are often viewed as a threat, I believe they represent more of an opportunity. As discussed in previous articles, AVs are likely to disrupt the driver model, not the platform itself, which remains central to connecting customers and service providers.

From niche disruptors to category leaders quietly expanding their global footprint, these companies are proving that strong fundamentals, smart strategy, and real-world demand can deliver impressive returns without relying on AI hype. In this article, we highlight 6 exceptional growth stocks that are thriving on their own terms, offering diversification, resilience, and compelling potential for the years ahead.

Let’s explore the overlooked winners driving meaningful progress beyond the AI boom.

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1. Mercadolibre (MELI)

Often called the Amazon of Latin America, Mercadolibre is a fast-growing digital powerhouse operating across e-commerce, payments, and logistics. Its fintech division, Mercado Pago, continues to expand rapidly as digital payments gain traction across the LATAM region, while Mercado Envios strengthens its competitive advantage with an increasingly efficient delivery network.

With massive underpenetrated markets and a consistent execution, Mercadolibre offers strong, sustained growth well beyond the AI spotlight.

2026 revenue growth - 28%

Buy zones $1,950 / $1,720 / $1,360

2. Transmedics (TMDX)

Transmedics is transforming the organ transplant industry with its breakthrough Organ Care System (OCS), a technology that keeps donor organs warm, functioning, and viable for far longer than traditional cold storage. This innovation meaningfully increases the number of usable organs, improves outcomes, and streamlines the transplant process for hospitals.

With a growing network of transplant centers adopting its platform and rising demand for life-saving procedures, Transmedics is scaling quickly. Its growth is driven by medical necessity, technological leadership and strong logistics.

2026 revenue growth - 20%

Buy zones $95 / $70 / $57

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By looking beyond the market’s current favorites and instead focusing on areas that have experienced sharp drawdowns, investors can uncover potential opportunities hiding in plain sight. These setups often emerge when sentiment is low, yet the underlying fundamentals remain interesting. A great way to find potential winners.

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1. Accenture

The IT consulting sector is under a lot of pressure. Increasing competition, impact of AI on efficiency, outsourcing, reduced investments. Additionally, the new software requires less efforts to implement and monitor.

However, Accenture remains a clear leader and few companies have the same capabilities to manage the biggest IT projets.

2025 growth 7.0%

Net profit margin 11.8%

2025 PE 18.6x

Buy zones:

• Buy zone 1 - Roughly the current price

• Buy zone 2 $215

• Buy zone 3 $175

2. Fiserv

Fiserv’s setup closely resembles what we observed with PayPal: slowing growth and mounting competition. However, Fiserv stands out with more resilient growth and steadily improving margins. A bubble-like pattern is also clearly taking shape.

2025 growth 8.8%

Net profit margin 20.4%

2025 PE 16.9x

Buy zones:

• Buy zone 1 - Roughly the current price

• Buy zone 2 $107

• Buy zone 3 $93

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3. Akamai

Akamai is facing overall slow growth, but the picture is more nuanced. Its legacy business is shrinking, while the cybersecurity and cloud divisions are expanding rapidly. This contrast is setting up a scissor effect: with declining headwinds on one side and accelerating growth and margin expansion on the other.

2025 growth 4.6%

Net profit margin 10.8%

2025 PE 24.4x

Buy zones:

• Buy zone 1 - Roughly the current price

• Buy zone 2 $59

• Buy zone 3 $45

4. The Trade Desk

The Trade Desk is under pressure due to slowing digital ad spending, intensifying competition from platforms like Google and Amazon, and concerns about the transition to its new system. Margins have also been squeezed by higher operating costs as the company continues to invest in technology and growth initiatives. Despite these headwinds, The Trade Desk remains a leader in programmatic advertising, with strong client retention and a scalable platform. The long-term thesis rests on the secular shift toward data-driven, automated ad buying, where The Trade Desk is well positioned to gain share.

2025 growth 17.0%

Net profit margin 14.5%

2025 PE 55.9x

Buy zones:

• Buy zone 1 - Roughly the current price

• Buy zone 2 $32

• Buy zone 3 $18

5. Lululemon

Lululemon has been struggling with slowing sales growth, particularly in North America, where consumer spending on premium apparel has softened. Rising competition from both athletic giants and new direct-to-consumer brands is also pressuring market share.

Margins have been under strain from higher promotional activity and inventory challenges. Despite this, Lululemon retains a strong brand, loyal customer base, and expanding international presence, particularly in Asia. The investment thesis centers on long-term global growth, product innovation beyond apparel, and the company’s ability to translate brand strength into new categories.

2025 growth 3.4%

Net profit margin 14.0%

2025 PE 13.4x

Buy zones:

• Buy zone 1 - Roughly the current price

• Buy zone 2 $130

• Buy zone 3 $113

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There are many ways to spot potentially undervalued stocks: looking at PE ratios, free cash flow yield, or even factoring in growth through metrics like the PEG ratio. You can also estimate a company’s potential total shareholder return to get a fuller picture. By the way, here is my article about the total shareholder return

In this article, we will narrow our focus to large-cap companies trading at a PE below 15x. As an exercise, we will also highlight the key risks that the market seems to be pricing into each one, giving investors an initial sense of whether these stocks might be true opportunities or simply value traps.

So without further ado, let’s dive in!

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1. Merck&Co

Merck&Co is a global pharmaceutical company that develops medicines, vaccines, and animal health products.

Market cap $210B

Country US

2025 growth 0.8%

2025 PE 10.9x

Dividend 3.8%

The main challenge facing Merck&Co is the looming loss of exclusivity for Keytruda. This blockbuster drug accounts for over 50% of the company’s sales and is its primary growth engine. Once Keytruda faces generic competition (expected before the end of the decade) it will likely put significant pressure on Merck’s revenue.

On the positive side, Merck generates substantial cash flow, holds a strong position in animal health, and has the resources and pipeline to develop new blockbusters. The key question, however, is whether these strengths will be enough to offset the eventual decline of Keytruda.

Buy zones $87 is a strong resistance, a breakout would be a good sign and a good option to enter the stock. Otherwise the $73/$75 zone

2. Evolution

Evolution AB is a Swedish company that provides live casino solutions and gaming software to online gambling operators worldwide.

Market cap $17B

Country Sweden

2025 growth 4.1%

2025 PE 14.0x

Dividend 3.7%

Amid regulatory and legal challenges, slowing growth, and shrinking margins, the stock has come under heavy pressure. However, billionaire Kenneth has seen significant potential, building a roughly 20% stake in the company, and share buybacks are also underway.

Despite recent headwinds, the underlying market remains robust, and the company continues to hold a dominant share in the live casino segment.

Buy zones 785SEK / 645SEK / 560SEK

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Most stock conversations still revolve around the usual suspects (Apple, Nvidia, Tesla). Great companies, no doubt. But while the spotlight stays fixed on the giants, plenty of interesting things are happening in the shadows.

That is where “Off the Radar” comes in. Every so often, I dig through the market’s overlooked corners to uncover companies quietly building something real, growing revenues, defending their moats, or disrupting in ways that have not hit the mainstream yet. These are not momentum plays or meme-fueled rockets. Just solid, often ignored businesses with potential worth paying attention to.

As always, this is not investment advice or a portfolio reveal. I may not own these stocks but I do believe they are worth watching. Because quality is not always loud, and the market does not always reward subtlety… at least at the beginning.

So, ready to explore another batch of opportunities? Let’s dive into Episode 4.

1. Tristel

Country: UK

Ticker: TSTL.L

Metrics

📈 2025 growth 9.5%

💎 Net profit margin 13.9%

💰 2025 PE 27.4x

🎁 Dividend 3.9%

Rating

• Growth ⭐️⭐️

• Profitability / balance sheet ⭐️⭐️

• Valuation ⭐️⭐️

• Business model ⭐️⭐️⭐️

• Risk ⚠️

What do they do? Tristel generates revenue primarily by selling proprietary infection‑prevention products (specifically chlorine dioxide‑based disinfectants)for high‑level decontamination of medical devices

Market dynamic. Very small market share, in a niche, but growing faster than the underlying market (4% in medical device desinfection, 0.1% in surface desinfection)

🐂 Bull case

• Defensive market and business model

• Strong position in a niche

• Strong balance sheet

• Decent profitability

🐻 Bear case

• Revenue concentration

• Very dependent on the UK market for now

Want to discover the 2 other off-the-radar stocks? (1 US stock and 1 Norwegian stock)
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Personally, I belong to the first group. This strategy, while appealing for its focus on fundamentals and long-term value, comes with two key challenges:

• When you buy during consolidation phases, it means you buy during periods with a negative market trend, which can be unsettling

• Also, you never know where the bottom is as it is impossible to predict the exact lowest point, adding an element of risk

Despite these challenges, I find this approach more compelling. By focusing on a fundamentals, I can identify its intrinsic value and seize opportunities to buy at a favorable price for long-term holding periods. This method, in my opinion, is often more rewarding than a momentum-driven approach, which involves buying stocks purely based on upward trends, regardless of their price or potential.

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To navigate the uncertainty of market bottoms, I like to establish 3 buy zones for staggered entries. While it is rare to hit the absolute lowest price, having a structured plan ensures readiness for any market conditions. These prices often emerge during bear markets, and if you are interested in how to navigate such times, check out my article on what to do and avoid during bear markets.

Please note that the prices and zones were calculated on Sunday, August 24th. While there may be minor discrepancies with today’s prices, the defined buy zones remain unchanged.

As I have outlined in several articles, it is time to start eyeing lower buy zones. A broader market pullback looks increasingly likely and with it, better entry opportunities

Let’s begin with an example

We will use Microsoft as an example

Currently the stock has a 32.7x PE and a current price of $507.

In the last article, the price was $379 and the buying zones were $350 / $315 / $249. The previous buy zone of $399 was reached so I updated the new buy zones.

The first new buying zone is around $435. This zone has been a resistance in 2024. It would give a PE of 28x.

So the zones are:

• $435 / PE 28x

• $350 / PE 23x

• $315 / PE 20x

Of course, the price could always drop further or fail to decline at all. In either scenario, the investment thesis and buying zones would need to be re-evaluated.

The stocks analyzed

In this article, we will discover the buying zones for 51 stocks. If you are a paid subscriber, you can request buying zones for specific stocks in the comments. Here is the full list:

• US Stocks (34)

  • Adobe, Alphabet, AirBNB, Amazon, Apple, Applied Materials, AppLovin, Blackrock, Broadcom, Cadence, Costco, Fair Isaac, Fortinet, Intuit, Intuitive Surgical, KLA Corporation, Lam Research, Mastercard, Meta, Netflix, NVidia, Palo Alto Networks, Paypal, S&P Global, Salesforce, ServiceNow, Shift4 Payments, Synopsys, Tesla, Transmedics, Unitedhealth, Visa, Waste Management, Zoetis

• Dutch Stocks (4)

  • Adyen, ASM International, ASML, BE Semiconductor

• Chinese Stocks (1)

  • Alibaba

• Swedish Stocks (3)

  • Alfa Laval, Assa Abloy, Evolution

• French Stocks (4)

  • Airbus, Hermès, LVMH, Schneider Electric

• Canadian Stocks (3)

  • Constellation Software, Lululemon, MDA Space

• Danish Stocks (1)

  • Novo Nordisk

• Argentina (1)

  • Mercadolibre

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Adobe (US)

Current price: $362 / Current PE: 22.4x / Ticker ADBE

Buy zones $350 / $275 / $210

Adyen (Netherlands)

Current price: 1,474€ / Current PE: 43.5 / Ticker ADYEN.AS

Buy zones 1,410€ / 1,240€ / 1,040€

Alibaba (China)

Current price: $122 / Current PE: 16.8x / Ticker BABA

Buy zones $115 / $98 / $78

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Alfa Laval (Sweden)

Current price: 444SEK / Current PE: 21.8x / Ticker ALFA.ST

Buy zones 390SEK / 330SEK / 240SEK

Alphabet (US)

Current price: $206 / Current PE: 20.7x / Ticker GOOGL

Buy zones $190 / $150 / $135

AirBNB (US)

Current price: $129 / Current PE: 30.7x / Ticker ABNB

Buy zones $114 / $104 / $85

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In this article, you will explore 50 high-quality European stocks that I have carefully selected, offering valuable insights into their potential, strengths, and weaknesses. This is an excellent resource for uncovering promising investment opportunities.

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The different scores

The screener uses 5 different categories. Each category has different metrics, mainly quantitative. Each metric gives a score depending on thresholds I defined, once again to fit my investment style.

Growth. The growth category uses 4 metrics:

• Past and future revenue growth

• Past and future EPS growth

Quality. The quality category uses 3 metrics: net profit margin, ROE and cash/debt ratio vs the EBITDA.

Valuation. For valuation, I use 3 metrics: PE, FCF yield and PEG.

Shareholder return. This category shows if the company is shareholder oriented. I look at 3 metrics: dividend yield, dividend growth and buybacks/dilution in outstanding shares.

Market. This is the only qualitative metrics. It represents the value of being present in the market and the company’s strength in it. It is a personal appreciation.

The screener

In this screener, I have selected 50 of the highest-quality companies from Europe, using the latest available data for scoring and ranking. The term 'quality' is not strictly defined here; it may refer to exceptional metrics, a robust business model, market dominance, or a strong competitive advantage.

Below are 8 stocks available for free subscribers. Access the full screener behind the paywall.

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:

• Access exclusive content. Dive deeper with detailed analyses, advanced insights, and premium research not available to free subscribers

• Follow my portfolio. Gain exclusive access to my portfolio, including monthly updates, tracking my moves, and watchlists

• Discover more stock ideas. Explore in-depth stock ideas, technical analyses, and strategies tailored to uncover hidden opportunities

• Support this newsletter. Your subscription directly supports the creation of high-quality, valuable content to help you achieve your investment goals

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