Some Potential Value Stocks

Many people seem concerned value no longer exists as it did in the past. Not true, it does even in an expensive market. It is a combination of asset quality (defined by growth, produce quality, moat, balance sheet quality, etc) and price (what value range you are getting it in given the context). For one conception of value, here are some industries, stock sectors that have been beaten down, where you might find it (oversimplified): SaaS: Each company is unique but generally most affected and beaten down by some form of AI risk concerns. Basic idea for many: AI risk is real over time, but likely exaggerated short term. Quality SaaS companies have tools too specific and entrenched in large clients for current generic AI to fulfil and replace that demand. Quality SaaS is also adapting AI to fit their specific products and services better than generic AI will be able to do. Individuals and small businesses may indeed consider switching to competition or using more AI, but majority of revenue from large contracts will almost certainly remain for foreseeable future. The above, for example, can likely be applied to ADBE approaching strong historic support from Covid and 2022, near 280, 2026 PE 12.5, 2027 PE 11, most metrics up and right so far. Discounting has been too aggressive most likely, will bounce at 280. Modest rerating upwards from greater than expected most resilience will already yield high rewards. Others include CRM, CSU, etc. Each company differs slightly, run your own valuations and financials, but the the main theme remains. Fintech, payment processing: Many stocks off highs and discounted due to competitive concerns and macro economic worries. May want to consider PYPL, FOUR, FISV, etc. PYPL valuation and buyback play, good entry, good balance sheet. Later two debt heavy but more aggressive, bounce and growth play. Value traps or opportunity, you decide. PYPL sub 58 seems quite safe. Healthcare: Some good companies have begun to recover. NVO under 50 was obvious given the setup. Health insurers bounced, likely still some safe value left in select choices. Diversified from AI and tech. Small Caps/Foreign: High risk high reward. One example I’m exploring is GAMB. 180 million market cap, very small, price movement exacerbated both ways. Positives: Forward and 2 year forward PE at 6-5. Price to book near 1.1-1.3 Free cash flow yield 20%. Management expect continued double digit growth despite challenges. Any positive or even in line quarter will likely see massive bounce, similar to previous volatile chart. CEO bought another 1% of company for $2 million at around current price, founder led. Diversifying to higher margin subscription business. EPS negative recently due to accounting ghost, liability included as non cash expense, payout for high acquisition performance. Likely near a bottom unless execution falls apart. Likely covered at these prices by potential buyout if things deteriorate, high quality domain name and assets for bigger player or PE. Negatives: Debt at 70 million overhang, though seemingly well covered and deal restructured to potentially pay compensation with shares easing cash flow concerns. Search changes led and perhaps continue to lead to headwinds on their domain referral business, yet to see real effects. Is it worth the risk, do research, aided by LLM like Gemini if necessary and make a decision. The point isn’t that these stocks are a buy or free money. The point is that value investing or investing in general requires work, research and analysis, conviction and patience and discipline to let a thesis play out, and to cut positions if a thesis is broken. There is always a sector, asset, company that is largely undervalued or unfairly beaten down due to sentiment or real but temporary issues. Nothing is guaranteed, but there are good bets nearly always, pick the risk reward in your favour and within your preference and priority range.