last week Brian Stoffel announced that he was selling his position in Docusign
why he wanted to invest that capital in other businesses that he had more
conviction in so what stocks is he going to be buying with that capital
we'll tell you next my name is Brian Feroldi and my name is Brian Stoffel
thanks to ycharts for sponsoring this video alright brian tell us what is stock number one
stock number one is airbnb which trades under the ticker symbol abnb we're very confident that
you're familiar with airbnb's business model this is a platform that connects people that
want to stay somewhere with hosts that's right brian airbnb has only been publicly traded for
a little over a year but the dynamics of the business go further than that that's because
obviously business contracted during the pandemic and it has since expanded in fact
over the past 12 months revenue has grown 65% and here's what's even more important during the
worst of the pandemic the company's free cash flow was bleeding out money like crazy but since then
it has recovered remarkably in fact over the last 12 months airbnb has generated over $2 billion in
free cash flow yeah the numbers are as clear as day this business is now much stronger and much
bigger than it was just a few years ago but how is it done for investors so far well if we look at
the stock since it came public it's only up about 11 which isn't terrible but it's certainly not
great either while i'm not an investor who focuses too much on valuation i want to point this out the
company's price to free cash flow ratio is sitting at about 46 which is its lowest point just about
ever now that's still expensive on a relative basis but i think it's a pretty good deal now
we've talked about airbnb on this channel before and this company scores extremely well on both of
our investing checklists that's right brian so when i see a business that's doing better over
time but it's stock is falling i'm excited to add more all right airbnb is stock number
one what is stock number two stock number two is snowflake a company that trades under the ticker
s-n-o-w snowflakes is a complex business to understand but the most important thing
to know about this company is that it's involved in the big data market that's right you can take
your data you can store it you can search it you can analyze it basically you can turn it into
functional advice that you can use to improve your business now here's something incredible
brian snowflake over the past three years has seen their top line grow more than 10x in just three
years now the reason for that is that this is a usage-based model and clearly new and existing
customers are using snowflake more and more and more which is a strong vote of confidence what's
even more exciting to me brian is that snowflake's gross profit growth has outpaced its revenue
growth which means that margins are rising that's right so the business is clearly doing really well
but if we look at the stock since it came public a little over a year ago that's not the same case
in fact shares are trading down by about 12 and if we look at all-time highs we can get shares of
snowflake for about a 45 discount from where they were in late 2021. yeah this is a stock where the
numbers look phenomenal but the stock returns so far have been quite poor now brian we should
point out that while snowflake stock is down substantially from its high it's still trading
at a very high valuation that's right brian even after you factor in all of that growth it's
trading for 32 times forward sales in no world would that be considered cheap and by forward
sales that means we're using next year's revenue growth estimate so on basically any metric that
you can look at snowflake stock is still extremely expensive while it is expensive both you and i
agree that this is actually a very high quality business absolutely and this highlights one of
the differences in our investment techniques because i don't really focus on valuation
i have no problem going in and buying more shares today if you want to learn more about how we came
up with these scores for snowflake click the link you see on your screen all right brian that's
two of the three stocks that you're going to buy and we're going to cover the third one next and by
the way it's the one that i am personally the most interested in before we do that we want to give
a shout out to our friends at ychart so if you've been following our channel for any period of time
you know that we're constantly using y charts to make complex analysis more visual intuitive and
shareable brian and i have used ycharts for years to do fundamental stock research but the platform
is actually far more powerful than that it can be used to compare stocks mutual funds and etfs
on nearly any metric that you can think of paid users can also easily add their own logo to make
it easy to distribute via email blog newsletter or on social media if you're interested in giving y
charts a try for free visit ycharts.com using the link in our episode description or follow them on
twitter at ycharts all right brian let's get into it what is stock number three stock number three
is pubmatic a one to two billion dollar company that trades under the ticker symbol p-u-b-m
brian this is a company that we've covered on our channel before but remind us what does this
company do so pubmatic is a digital advertising company and they're focused on the sell side what
that means is that if you have a blog or website where you rely on advertising revenue to support
yourself you can use pubmatic to fill those advertising slots they are focused on the sell
side you hear us talk a lot about the trade desk they are more focused on the demand side or those
that want to buy those advertising venues brian for such a small company this company is putting
up very strong top line growth i agree brian and over the last year which is its entire life as
a public company its top line sales have grown roughly 80 but here's what's really impressive
to me this is a small company that is aggressively investing in itself and yet it is still free cash
flow positive to the tune of about 50 million dollars over the past year so strong tap line
growth huge growth and free cash flow and yet this stock has not performed well on the markets it
has not when it came public it shot up very high everyone was excited about it but it is down 20
since it came public in late 2020 and if we look at it since its all-time highs it's actually down
more than 65 unlike snowflake and airbnb i think there's actually a pretty good argument to made
here that this company's stock is relatively cheap i agree i mean it is free cash flow
positive and it's trading for under 30 times free cash flow and under six times sales those numbers
indicate to me that wall street is not pricing this company for extreme growth and yet this
is a company that scored very well on both of our investing checklists that's right this is a small
company that i think has huge potential like you it's the one that i'm the most excited by
and i have no problem going in to buy more shares today well there you have it brian's going to
be selling a position in docusign and using the proceeds to buy airbnb snowflake and pubmatic you
enjoyed this video give it the thumbs up and let us know in the comment section below brian's out