hi i'm jimmy in this video we're looking
for some of the top growth stocks that
could be good buys in the current stock
market
year to date the stock market the s p
500 is down about 15 percent meanwhile
the nasdaq is down closer to 25
so this could be a great opportunity to
add some growth stocks stocks that have
over the past couple years have probably
been overvalued at perhaps a good price
so what we're doing is what we've done
is we've taken uh different live streams
that we've done either publicly we've
done a couple public once or in our
private investing community and we're
trying to find we're pulling down growth
stocks that look like they could be
undervalued to see which ones we should
do deep dives on i've got five or six on
this list that i'm going to share with
you today that we want to do deep dives
on let me know which one you think i
should do a deeper dive on which ones we
should make videos on and if we missed
one that you think is undervalued right
now please let us know in the comments
below and before we jump into this i
just want to let you know about our
website that we're building where we can
value stocks quickly and easily that's
essentially how we came up with these
stocks you punch in the ticker it kicks
back the fair value for the stock using
discounted cash flow and after the first
version comes out which will be ready by
the end of june we're going to add
additional valuation methods until
eventually we can value all types of
stocks and all phases of businesses in
all the countries around the world
but in the meantime we're starting with
discounted cash flow we are going to
start globally and again this website
should be up and running by the end of
june so if you'd like to sign up for it
i'll leave a link in the description
below but for now let's jump into our
first stock so our first growth stock is
booking holdings ticker symbol bkng
now we can we get a fair value of about
31.34 right now the stock's trading
closer to two thousand dollars per share
now if we would use the company's own
weighted average cost of capital which
is a slightly over 10 percent well it
looks to be a little bit overvalued
using ten percent as our required rate
of return well we get a fair value of
about what is that about two thousand
dollars per share now before we jump in
and lean on this thirty one thirty four
dollars per share as far as a fair value
i like to check a few things first how
many analysts are covering it right now
we could see that in the next three
years of projections for free cash flow
we have a decent amount of analysts
projecting those numbers the numbers
that we see here are the average over
those for of all the analysts so again
the higher the number of analysts we
have covering a stock the more likely
that is to that's going to be reliable
now a lot of people question analysts
and actually don't like to use the fair
value like the calculation for the
dollar price their target prices i don't
really like to use that but
when we when it comes to free cash flow
or the numbers that they build into
something like earnings per share well
if you ever see us a company report
earnings or you see a headline on a
company after they report earnings and
they say oh the company missed earnings
by two cents per share well it was
analysts that projected that two cents
per share and for anybody's ever tried
it getting that close with projections
for a company is very difficult to do
now these analysts this is all they do
they cover a handful of companies they
do this for a living that being said i
have found that their numbers from a
from a projection standpoint are is a
great place to start we we of course
should make changes to these after we do
our own deep dive if we find they're
necessary but it is a good place to
start so as far as a quick fair value
this stock looks like it could be
undervalued right now
and it looks like it could have some
growth going out the next few years okay
now let's jump over the next one here
we've got akamai technologies ticker
symbol akam and again we can see that
although this company is smaller they
are in the early stages of growth and
we're showing a decent amount of growth
in the early years that being said the
stock looks like it could be undervalued
using both the company's weighted
average cost of capital and my personal
required rate of return of seven and a
half percent now many people have asked
why i'm using seven half percent i'm
actually using a premium over corporate
bonds and as bonds go up uh from a yield
perspective which they have been
recently i'm gonna have to increase this
but i think uh having a moving required
rate of return makes more sense than a
fixed rate like 10 or 12 and a half
percent because what if bond rates go up
to 12 and a half well if that's the case
mine will be about 17. so i think it
makes more sense to adjust it than the
pick a number and stick with it because
as bond rates changes the fair value of
stocks should also change but either way
that's where that number comes from
again we have a decent amount of
analysts covering the stock again this
is a company that at first glance looks
like this one could be worth a deeper
dive okay next up is a company i've
actually researched in the past and
that's electronic arts ticker symbol ea
electronic arts looks both undervalued
using my seven half percent and their
own required rate of return of six point
three six percent
the company's cost of capital in this
case is kind of low so i would take our
number as a more conservative valuation
method the seven and a half percent i
like the 144. 144
if i'm going to pick a number to add a
margin of safety to
but again decent number of analysts
covering it we got reasonable growth
from a free cash flow perspective and
this company also pays a slight dividend
so although this company's growth isn't
quite as fast as some of the other
companies it looks like it could be
trading at a decent discount today and
could be worth a stock worth considering
now along those same lines we've got
another company called take two
interactive again another video game
company does a very similar thing as
electronic arts ticker symbol ttwo
this one looks undervalued from a whole
bunch of different cost of capital or
required rates of return seven and a
half percent which is mine
7.77 which is theirs and then 10
even at that number it still looks like
it could be slightly undervalued the
company has reasonable free cash flow to
revenue and reasonable revenue growth
free cash flow is going to plenty of
analysts
overall this looks like a stock that
should be that could be considered for a
deeper dive now the current p e ratio is
slightly on the high end so that i sort
of that it will be something when i'm
doing the research that i want to pay
attention to but frankly pe price to
earnings typically isn't something that
turns me off immediately because a lot
of things can influence earnings that
wouldn't necessarily influence free cash
flow so you there could be one-time
charges that impact the earnings per
share and if that were to happen well
that pe could drastically change in one
direction or another whether that be
positively or negatively
so to just look at that number and say
hey i'm not buying it because of that to
me that's a bit short-sighted it is
something i want to pay attention to
when we do our research we can figure
that out but again if this is a company
you think we should analyze please let
me know in the comments below
okay next up we have an interesting one
because it's a real estate company and
this is a real estate investment trust
and reits are a bit unusual now you can
see when we look at the fair value it
doesn't look like this one's undervalued
at all
and that's really because
this kind of cash flow is not the best
valuation methods for a reit and this is
right in line with what i was talking
about as far as as as we developed the
website once the dcf part of the website
is live in june well almost immediately
we want to start adding other valuation
methods ways to value banks ways to
value insurance companies ways to value
reits
because discounted cash flow doesn't
work for every company well in this case
a better valuation method would be to
use something like price to adjusted
funds from operations
well this is a chart of american towers
priced to adjusted funds from operations
going back to 2012.
the average over this time period is
about
25x by the way price to adjusted funds
from operations it's similar to earnings
per share so it's something like priced
earnings per share except it removes it
adjusts the reason it's adjusted funds
from operations is it removes some of
the
the one-time charges it really just
focuses on you know they're managing
this building they're renting it out how
much what does it cost them what is it
what are they bringing for revenue and
it sort of gives them the gives us the
profit we're paying so at 21 that means
we are paying 21 dollars for every one
dollar of profit their average over this
time period
is we would have paid 25 dollars for
every 25.1 for every one dollar of
profit so based on that metric it looks
like this stock could be undervalued and
could be an interesting one one of the
reasons this could be interesting is
generally these stocks paid decent
dividends their dividends over a 2.3
percent we could see that over there
so again could be a stock worth
considering but again if you're going to
look at reits don't go with free cash
flow don't even go with earnings per
share make sure you look at price to
adjusted funds from operations most
companies publish those numbers so most
in their financial reports they'll
publish adjusted funds from operations
so you should be able to find that
number that being said the next company
we have is the stock i actually
personally own and that is google so
google is currently trading at about 200
bucks per share
i bought it at about 2400 i believe we
got a fair value up near 3200
right there
that's using seven half percent but like
i said i do like it when a company's
weighted average cost of capital also
looks like they're undervalued so if you
really want to wait for a deal wait for
it to get to the 2138 that's ideally the
best way to go but again this is a stock
look at those free cash flow numbers
look at the growth of those numbers we
have plenty of analysts the growth of
free cash flow looks great we got
revenue growth right over here that
looks fantastic this is a company that
has a strong moat this is a company that
they've turned it into a verb you don't
search for something on the internet you
google it to me that that em that
illustrates how powerful the business
they have and clearly projections for
free cash flow growth are quite good and
at the end of the day a stock is
ultimately our business should be worth
how much cash flow they can generate for
their investors so over the long run
this looks like a stock that could be
really good now i did do a video on this
one in the past i'll leave a link in the
description below for that video as well
but if you want me to update it please
let me know now if you want to get
access to
this website again it's coming live in
june and if you sign up before the
website goes live we are locking in the
price so the price never goes up on you
so if you'd like to sign up i will leave
a link in the description below there's
a link right here and thank you so much
for sticking with me all the way to the
end of the video i really do appreciate
it thank you and i'll see in the next
video