Where we see value going into the new year

AI Summary

Author presents value ideas for the new year: BNDW bonds, Constellation Software (and its European arm Topicus), and MercadoLibre, each with a multi-year growth or appreciation thesis.

BNDW — LONG The author argues the decade-long equity bull market has depressed bond prices, and BNDW offers roughly 4% yield with mid-term duration. He expects gradual price appreciation over the next 5-10 years in addition to yield, with a recession acting as a stronger catalyst.

i see price appreciation maybe not in the coming year, but gradually over the next 5-10 along with the yield. When a recession happens, this will really drive the price appreciation. good to have in general, especially as of now, not because stocks are high, but because bonds are low.

CSU.TO — LONG Author says Constellation Software's recent price decline came after the founder left and the stock had become overvalued. He argues conventional PE is misleading because it is a serial acquirer; PFCF is near 20 and normalized PE would be near 20 if profits weren't reinvested. He expects 15-20% internal CAGR for another decade plus price-to-fundamentals appreciation.

It let the stock price depress as it was going up into overvaluation for too long. when doing your own DD on this one, consider that it’s a serial acquirer so just going by PE is misleading. PFCF near 20. if they stopped investing all profits, their PE would be near 20 as well. check out their fundamentals, speaks for itself. On all fronts, I’d expect 15-20% growth CAGR internally for another decade. along with Price:Fundamentals appreciation.

TOI.V — LONG The author identifies TOI/TOITF as Constellation Software's European arm and says its fundamentals and behavior are the same as CSU. He holds it at about one-quarter the size of his CSU position, implying parallel multi-year growth expectations.

Also has a European arm TOI or TOITF for US investors, same thing, parallel fundamentals and behavior. I hold this at about 1/4 the amount of CSU

MELI — LONG Author sees MercadoLibre as a South American e-commerce conglomerate comparable to Amazon, with strong fundamentals and an attractive price dip. He emphasizes FCF over earnings and good ROIC, and expects roughly 20-30% internal CAGR for about five years.

Great fundamentals. Great price/dip. Again, I’d pay more attention to FCF than earnings. good ROIC, I’d expect around 20-30% CAGR internally for 5 years or so. do your own DD. i like the stock

Score 7

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I’m generally a boring-investment investor. I believe if a potential investment has too much flash or excitement, it’s usually compensating for a lack of fundamentals. So be prepared for some basic well balanced concepts on this list.

Firstly;

# BNDW (total world bond market)

This bull market of the past decade especially this past year has depressed bonds, especially government bonds. BNDW is like the VT of bonds. about 70% is government, 30% corp. and in total, 50/50 US and intl. avg 7-8 year duration so i’d say about mid term. about 4% a year yield.

i see price appreciation maybe not in the coming year, but gradually over the next 5-10 along with the yield. When a recession happens, this will really drive the price appreciation. good to have in general, especially as of now, not because stocks are high, but because bonds are low.

# CNSWF (CSU original Canadian ticker, Constellation Software)

lets go into the more traditional, solid value stocks. I’ll keep it short and concise for this one. The original founder left, he’s an old guy and had health concerns so I imagine just taking more time with family now. Similar to a warren buffet stepping down. It let the stock price depress as it was going up into overvaluation for too long. when doing your own DD on this one, consider that it’s a serial acquirer so just going by PE is misleading. PFCF near 20. if they stopped investing all profits, their PE would be near 20 as well. check out their fundamentals, speaks for itself. On all fronts, I’d expect 15-20% growth CAGR internally for another decade. along with Price:Fundamentals appreciation. \*\*Also has a European arm TOI or TOITF for US investors, same thing, parallel fundamentals and behavior. I hold this at about 1/4 the amount of CSU\*\*

# MELI (Mercado Libre)

E-commerce conglomerate. kind of like a south american amazon. Fingers are getting tired typing. Great fundamentals. Great price/dip. Again, I’d pay more attention to FCF than earnings. good ROIC, I’d expect around 20-30% CAGR internally for 5 years or so. do your own DD. i like the stock

have a good new years

Ideas

u/Sugamaballz69 Reddit r/ValueInvesting

Bonds cheap; expect price appreciation plus yield over 5-10 years.

The author argues the decade-long equity bull market has depressed bond prices, and BNDW offers roughly 4% yield with mid-term duration. He expects gradual price appreciation over the next 5-10 years in addition to yield, with a recession acting as a stronger catalyst.

u/Sugamaballz69 Reddit r/ValueInvesting

Serial acquirer undervalued; expect 15-20% CAGR for a decade.

Author says Constellation Software's recent price decline came after the founder left and the stock had become overvalued. He argues conventional PE is misleading because it is a serial acquirer; PFCF is near 20 and normalized PE would be near 20 if profits weren't reinvested. He expects 15-20% internal CAGR for another decade plus price-to-fundamentals appreciation.

u/Sugamaballz69 Reddit r/ValueInvesting

European arm same as CSU; held at quarter size.

The author identifies TOI/TOITF as Constellation Software's European arm and says its fundamentals and behavior are the same as CSU. He holds it at about one-quarter the size of his CSU position, implying parallel multi-year growth expectations.

u/Sugamaballz69 Reddit r/ValueInvesting

South American e-commerce with strong FCF; expect 20-30% CAGR.

Author sees MercadoLibre as a South American e-commerce conglomerate comparable to Amazon, with strong fundamentals and an attractive price dip. He emphasizes FCF over earnings and good ROIC, and expects roughly 20-30% internal CAGR for about five years.

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