u/pravchaw 5.0 2 ideas

The stock has fallen ~70% from its 2021 peak partly on AI disruption fears, yet the company is integrating AI into its platform (IWant) and already automated its core service (Beti), while maintaining 9% YoY sales growth and ~22% GAAP net income margin. The market's overreaction to AI risk has created a valuation disconnect for a profitable company with a recurring revenue model and a history of double-digit growth. PAYC is cheap with a margin of safety, assuming a conservative 10% forward EPS CAGR, making it a long-term value investment. Growth slowdown persists beyond temporary trend; AI disruption materializes differently than expected; intense competition in HCM space pressures pricing.

Diageo's stock has crashed to near 15-year lows after reporting a 2.8% decline in organic net sales and cutting its dividend by 50%, driven by weakness in the US and China. The significant price drop has made the stock appear "very undervalued compared to historical metrics," which could signal a potential entry point for value investors if the business stabilizes. The author is contemplating if this is a value opportunity, implying a potential long position if the current issues are temporary and the market has overreacted. However, they are also cautious about the possibility of further declines ("the other shoe going to drop"). The challenges in key markets (US spirits, Chinese white spirits) could be structural rather than cyclical, leading to further earnings deterioration and price declines. The dividend cut may signal deeper, unresolved problems within the business.