Where I think the market is mispricing quality: 10 valuation dislocations for the next 3–5 years

Wonderful-Finish4822 · 2026-09-07T08:43:00+00:00

=== SUMMARY === - The author presents a monthly Top 10 list of quality companies where the market may be pricing in too much pessimism versus business quality, with an expected 3–5 year horizon. - Core thesis: reasonable forward valuations plus margin expansion and durable competitive positions should allow these names to outperform the S&P 500. - Alphabet is deliberately left out despite being well-liked because its valuation and heavier capex reduce the current 3–5 year opportunity. - Quality assessment: This is reasonably well-researched fundamental DD with clear reasoning and risk caveats, though it relies on forward estimates and links to the author’s own Substack. === SENTIMENT === BULLISH === TRADE IDEAS === INTU - LONG | confidence: 0.80 | sentiment: +0.70 Speaker: u/Wonderful-Finish4822 Thesis: 1. THE FACT: Intuit trades around 15x FY27 earnings; revenue growth has slowed, but margin expansion should drive faster profit growth. 2. THE BRIDGE: If customer growth stabilises, the market’s pessimism creates a re-rating opportunity as earnings outpace revenue. 3. THE VERDICT: Long INTU as a quality compounder at a below-quality valuation. 4. RISKS: Customer growth keeps weakening, margins fail to expand as expected, or AI disrupts its financial software moat. Timeframe: long-term Key Points: - INTU #1; ~15x FY27 EPS - Margin expansion should outpace revenue growth - Watch customer growth for bear/bull case - AI may strengthen financial system of record ADBE - LONG | confidence: 0.70

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Summary

The author presents a monthly Top 10 list of quality companies where the market may be pricing in too much pessimism versus business quality, with an expected 3–5 year horizon.
Core thesis: reasonable forward valuations plus margin expansion and durable competitive positions should allow these names to outperform the S&P 500.
Alphabet is deliberately left out despite being well-liked because its valuation and heavier capex reduce the current 3–5 year opportunity.
Quality assessment: This is reasonably well-researched fundamental DD with clear reasoning and risk caveats, though it relies on forward estimates and links to the author’s own Substack.

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I keep a monthly ranking of companies where I think the market is pricing in too much pessimism relative to the quality of the business.

What I’m looking for is a decent chance of outperforming the S&amp;P 500 over 3–5 years, taking valuation, business quality and risk into account.

My August Top 10, using 31 August prices:

1. Intuit
2. RELX
3. Adobe
4. Meta
5. Constellation Software
6. Experian
7. Nvidia
8. Autodesk
9. Tencent
10. Microsoft

A few worth explaining:

**Intuit**

Still my #1. Around 15x FY27 earnings.

Revenue growth has slowed, but margin expansion should allow profits to grow quite a bit faster. Customer growth is what I’m watching most. If that stabilises, I think the market is too pessimistic. If it keeps weakening, the case gets harder.

I also lean towards AI strengthening Intuit’s position as a financial system of record.

**Adobe**

Probably the one people will disagree with most.

At around 11x forward earnings, a lot of AI disruption seems priced in already. Some of that disruption is real, but subscription growth is still double digit and AI usage is increasing.

My view is that Adobe doesn’t need to dominate the AI transition for the stock to work from this valuation.

**Meta**

Moved higher this month. I think people underestimate how difficult its social infrastructure is to replace.

The business doesn’t have to deliver everything investors hope for around AI to justify its valuation. Heavy spending still matters, though.

**Nvidia**

Entered the Top 10 after Q2.

At roughly 17.5x forward earnings, I think there is room for some normalisation. But that depends on how sustainable those earnings turn out to be.

Financing risk further down the AI chain, cash conversion and eventual cyclicality keep it below some of the others.

**Tencent**

Around 13x forward earnings looks cheap for the business.

But I apply a bigger discount for governance, capital controls, shareholder-access risk and heavy AI spending. Those are part of the valuation case.

**Why no Alphabet?**

It’s outside the Top 10, in my shadow ranking. I like the business a lot, and recent results made me less worried about AI disrupting Search.

But at a higher valuation, with much heavier capital spending, I don’t currently see the same 3–5 year opportunity as in some of the names above.

I also keep a separate **30-year ranking**, where current valuation matters less and business durability and long-term compounding matter more. The order is different because the question is different.

I publish the ranking monthly, with the reasoning and what changed from the previous month. If you’re interested in following how these views develop, the full August post is here:

[August valuation dislocation ranking](https://michaelhillaert1.substack.com/p/valuation-dislocation-august-2026)

Which placement do you disagree with most, and why?

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