Your 10 Favorite Stocks
Top Picks from our Partners
Let’s go back in time together.
You’re at a local event with some friends and family. All of a sudden, someone approaches you and asks you whether you want to play a little game.
A bit further away, an ox is standing in a field eating some grass. You need to guess the weight of the ox and if you can make the best guess of everyone attending the event you win $1,000.
It goes without saying that you want to participate in this contest. But you have no idea how much an ox weighs…
… As your friends and family also participate, they start guessing. Your best friend thinks the ox weighs 2,300 pounds while your brother estimates that the ox only weighs 400 pounds.
You decide to pick something in the middle and write down 1,400 pounds as your final answer.
This experiment actually took place in 1906. It was executed by polymath Sir Francis Galton and 787 people entered the competition.
As it’s very hard to estimate the weight of an ox, the answers varied widely. The most conservative person said the ox would weigh 100 pounds while someone else said that the ox would weigh almost 4,000 pounds.
But you know what’s remarkable? The average guess was equal to 1,197 pounds.
The actual weight of the ox? 1,198 pounds.
This means that the crowd provided an almost perfect answer.
That’s what we call The Wisdom of Crowds.
It’s probably one of the most valuable features of Compounding Quality.
All partners keep learning from each other.
Together, we know more than on our own
So at the end of 2023, I launched a little contest.
Every Partner could enter his top 3 picks for 2024.
Let’s go over the 10 most picked stocks and let The Wisdom of Crowds do its magic.
10 Favorite stocks of our Partners
10. Alphabet ($GOOGL)
Alphabet, Google's parent company, makes money from online advertising through its search engine, YouTube, and other platforms.
They also generate revenue from cloud computing services like Google Cloud.
Additionally, Alphabet invests in innovative projects and businesses through its ventures arm, like self-driving cars and life sciences. Overall, Alphabet's income comes from ads, cloud services, and diverse ventures.
Undisputed market leader in online advertising
Insiders still have more than 50% of the voting power
Cash flow machine with very high profitability
9. Advanced Micro Devices ($AMD)
Advanced Micro Devices (AMD) is a semiconductor company that designs and produces computer processors, graphics cards, and other related technologies.
Known for its CPUs (Central Processing Units) and GPUs (Graphics Processing Units), AMD competes with companies like Intel and Nvidia.
AMD's business model involves selling its processors and graphics cards to original equipment manufacturers (OEMs) for inclusion in computers and other devices.
AMD is known for its high-performance products and competitive pricing
ROIC of more than 40%
The company returned 3,475% to shareholders since 1990 (CAGR: 10.9%)
8. Ulta Beauty ($ULTA)
Ulta Beauty is a retail company specializing in beauty products and services. They operate stores offering a wide range of cosmetics, skincare, haircare, and fragrance products from various brands, along with salon services.
Ulta Beauty aims to provide customers with a diverse selection of beauty products and an interactive shopping experience, blending both high-end and affordable options.
Capital light business model with a proven track record
Great capital allocation skills
Cheap valuation level in combination with heavy share buybacks
7. Paypal ($PYPL)
Paypal provides technology and payment solutions that facilitate mobile, in-app, and online payments for merchants and consumers.
Users can send money to others by entering the recipient's email address. It also serves as a platform for receiving payments by sharing one's own email.
In addition, the company offers other value-added services such as working capital and short-term business financing, gateway services, and invoicing.
The end market is growing at attractive rates (> 10% per year)
Cheap valuation (Forward PE of 12.1x versus 5-year average of 46.3x)
6. Kelly Partners Group ($KPG)
Kelly Partners Group is a professional services firm that offers accounting, taxation, and consulting services to private businesses and high-net-worth individuals.
It can be seen as a serial acquirer just like Constellation Software. They are trying to build ‘The Berkshire Hathaway of Accounting’.
Brett Kelly is an excellent owner-operator
Plenty of growth potential
Relentless focus on creating shareholder value