<div class="subscription-widget-wrap-editor"><div class="subscription-widget show-subscribe"><div class="preamble"><p class="cta-caption">Thanks for reading Stock Analysis Compilation! Subscribe for free to receive new posts and support my work.</p></div><form class="subscription-widget-subscribe"><input class="email-input" name="email" tabindex="-1" type="email" /><input class="button primary" type="submit" value="Subscribe" /><div class="fake-input-wrapper"><div class="fake-input"></div><div class="fake-button"></div></div></form></div></div><p><em>Don't hesitate to send me any interesting research you come across.</em></p><p><em>You can also follow me on Twitter <strong><a href="https://twitter.com/StockCompil">@StockCompil</a></strong></em></p><p><strong>This article may be truncated by some email providers, so I suggest you read it directly on Substack for a better reading experience.</strong></p><div><hr /></div><h3><strong>Riverwater Partners on Aehr Test Systems $AEHR US</strong></h3><p><strong>Thesis:</strong><br />Aehr Test Systems revolutionizes semiconductor reliability with burn-in technology, driving growth through EV and AI advancements.</p><p><strong><a href="https://riverwaterpartners.com/wp-content/uploads/2024/10/Riverwater-Q3-2024-Micro-Opportunities-Update.pdf">Extract from their Q3 letter,</a></strong><a href="https://riverwaterpartners.com/wp-content/uploads/2024/10/Riverwater-Q3-2024-Micro-Opportunities-Update.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />We initiated a position in Aehr Test Systems (AEHR) during the 3rd quarter. AEHR is a worldwide provider of burn-in functional test systems in which electronic components are subjected to elevated voltages and/or temperatures for a duration of time (2–48 hours). Burn-in screens out “infant mortality” failure in electronic components prior to the components making it into a module, allowing for higher yields at the critical module production stage.</p><p>The increased quality and reliability requirements of the automotive integrated circuit markets, and the increased heat-tolerance required for AI chips, are driving new opportunities for AEHR testers. The stock was weak during the first half of 2024 as the global electric vehicle (EV) market, AEHR’s primary market to date, slowed. This provided an opportunity to purchase the stock. In fact, China’s EV production, which relies on AEHR equipment, remains resilient. Importantly, in September AEHR announced its first order to support production tests and burn-in of AI processors. We believe the use of burn-in will become more prevalent in semiconductor production, which will drive accelerated growth for AEHR over the next 3–5 years.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Perritt CM on Alliance Entertainment $AENT US</strong></h3><p><strong>Thesis:</strong><br />Alliance Entertainment's remarkable turnaround story showcases its path from SPAC struggles to operational excellence—discover how this company is set to reclaim growth.</p><p><strong><a href="https://www.perrittcap.com/alliance-entertainment-holding-corporation-aent/">Extract from their Q3 letter,</a></strong><a href="https://www.perrittcap.com/alliance-entertainment-holding-corporation-aent/"> link here.</a></p><p><strong>Analysis:</strong><br />We view Alliance Entertainment Holdings as an attractive name for several reasons. We were originally drawn to the company after it went public via a SPAC, or Special Purpose Acquisition Company, and subsequently sold off in the open market. To offer a brief synopsis, a SPAC is a publicly traded shell company listed on the stock exchange with the purpose of acquiring (or merging with) a private company without going through the initial public offering process which often carries significant and regulatory burdens. Often, the companies that go public via this method are underfollowed by analysts on the street and have difficulty getting traction with the investing public, which puts pressure on the stock. This was the case for Alliance Entertainment, which rapidly sold off from the price where it went public at $10.00 to a low of $0.70 over the course of 2023.</p><p>Aside from the lack of attention that many SPACs get from the investing public, Alliance Entertainment also had several one-time issues hit them in 2023 that caused the company to go from making money to losing money. First off, they accumulated too much inventory in 2022 and subsequently had to sell off some of that at a discount. They were also hit with one-time supply chain disruptions that caused them to experience excessive transportation costs for the year. All this culminated in them going from making $60 million in EBITDA (earnings before interest, taxes, depreciation, and amortization) in 2022 to losing $17.6 million on an EBITDA basis in 2023 (the company operates on a June-end fiscal year, and all numbers cited here reflect that). However, during this time and carrying into 2024, the company initiated several investments and cost savings initiatives in the business that we believe could lead to a robust turnaround of their prospects.</p><p>First off, they consolidated their distribution facilities from two to one location, shutting down their facility based in Minnesota and consolidating all activity in their facility in Kentucky. At the same time, they made a comprehensive investment in automation and operations streamlining in their facility in Kentucky that reduced shipping times and improved overall warehouse performance. Through these efforts, they were able to realize nearly $400K in annual labor savings and save $60K by retiring equipment that needed to be modernized.</p><p>These efforts began to bear fruit for the company in fiscal 2024 as they were able to recover from losing money to making $24 million in EBITDA, which we view as a partial recovery from losses of 2023. They were also able to reduce inventory levels by 35%, which allowed them to free up much-needed working capital, which was used to reduce indebtedness by 40%, reducing their interest expense. This has left the company in an advantageous position to execute on their inorganic growth strategy via acquisitions.</p><p>The company has made ten successful acquisitions in its history including the namesake Alliance Entertainment Holdings group. This Merger & Acquisition strategy has allowed them to grow rapidly in a physical media product category that only grows in the mid-single-digit percentages each year. They plan to use acquisitions to get into new, complementary product categories, acquire new e-commerce distribution channels, and roll up strategic distributors in the space.</p><p>We believe that during 2024, the company has overcome the challenges of 2023 and re-emerged stronger and more nimble heading into fiscal year 2025. Their investments in automation and process improvements will continue to bear fruit and we expect they can get EBITDA margins back to 5%, which equates to $55 million in EBITDA at today’s run rate. It is our thesis that they will be able to build upon this success going forward and contribute positively to value creation for shareholders.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Royce IP on Applied Optoelectronics $AAOI US</strong></h3><p><strong>Thesis:</strong><br />Applied Optoelectronics thrives on AI-driven demand for optical components, making it a standout opportunity in the micro-cap universe.</p><p><strong><a href="https://www.royceinvest.com/insights/2024/4Q24/two-high-conviction-micro-cap-holdings">Extract from their Q3 letter,</a></strong><a href="https://www.royceinvest.com/insights/2024/4Q24/two-high-conviction-micro-cap-holdings"> link here.</a></p><p><strong>Analysis:</strong><br />Another name that we really like for the long run is Applied Optoelectronics, which provides optical communications products into data centers and cable companies. The company finds itself at the forefront of the rapid expansion of demand for the optical components that are needed to build the infrastructure to support Hyper Scale Artificial Intelligence applications. As we'll rarely be able to invest in the major scale players at the forefront of big macro trends, a critical element in investing in micro-cap stocks is a careful analysis of supply chains. Our analyses allow us to find interesting niche companies that can profitably benefit from these major trends. We think Applied Optoelectronics is a great example of the opportunities we can find in the micro-cap universe via a thorough understanding of supply chain dynamics.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Perritt CM on Ceragon Networks $CRNT US</strong></h3><p><strong>Thesis:</strong><br />Ceragon leverages wireless innovation and rising demand for high-bandwidth networks, poised for rapid growth and operational gains.</p><p><strong><a href="https://www.perrittcap.com/ceragon-networks-crnt/">Extract from their Q3 letter,</a></strong><a href="https://www.perrittcap.com/ceragon-networks-crnt/"> link here.</a></p><p><strong>Analysis:</strong><br />Ceragon’s revenues are mainly in India and the U.S. They won a $150m order from a Tier 1 operator in India last year and have not even started to deliver on it. CRNT recently acquired Siklu, which gave them more exposure to the private networks segment, thus increasing bookings and revenue growth opportunities. There is a growing need for high-bandwidth communication networks in education, utilities, and government sectors. CRNT aims for $80m+ in bookings from private networks this year—double that of 2023.</p><p>Wireless solutions have many benefits over the alternative of fiber. With wireless, there is low deployment cost, rapid deployment, application for 4G and 5G, and it is excellent for rural and suburban areas where fiber would be too expensive.</p><p>Their financial performance since 2020 has been good. Revenue has grown from $263m to $347m in 2023. They have improved from an operating loss of $4m to an operating profit of $29m. 2024 goals are to achieve non-GAAP operating margin of at least 10%, expect revenue of $395m, and trade at 0.5x Enterprise Value/Sales.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Liontrust on Core & Main $CNM US</strong></h3><p><strong>Thesis:</strong><br />Core & Main addresses critical water infrastructure needs, driving environmental benefits and sustainable water management solutions.</p><p><strong><a href="https://www.liontrust.co.uk/insights/monthly-comms/2024/10/liontrust-gf-sf-multi-asset-global-fund-q3-2024-review">Extract from their Q3 letter,</a></strong><a href="https://www.liontrust.co.uk/insights/monthly-comms/2024/10/liontrust-gf-sf-multi-asset-global-fund-q3-2024-review"> link here.</a></p><p><strong>Analysis:</strong><br />In terms of trade activity, we added Core & Main, the US distributor of pipes, valves, and fittings to help disperse and control the flow of water and wastewater transmissions under our "Improving the management of water" theme. These have outsized benefits from an environmental perspective, given the importance of managing water and water infrastructure effectively.</p><p>The wastewater products enable water to be reclaimed and are used in a variety of applications from industrial processes to agricultural irrigation.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Parnassus on CoStar Group $CSGP US</strong></h3><p><strong>Thesis:</strong><br />CoStar's dominance in real estate data and marketplaces is poised to expand with strategic residential market investments.</p><p><strong><a href="https://content.parnassus.com/094ee837-48bb-001c-6959-053670061ebf/b1aaffe5-217b-4811-a7fe-bb3dd9e754b3/Parnassus%20Growth%20Equity_Commentary_3Q24_Final.pdf">Extract from their Q3 letter,</a></strong><a href="https://content.parnassus.com/094ee837-48bb-001c-6959-053670061ebf/b1aaffe5-217b-4811-a7fe-bb3dd9e754b3/Parnassus%20Growth%20Equity_Commentary_3Q24_Final.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />CoStar owns a large proprietary property database and a wide network of marketplaces, earning significant revenue from high-renewal subscriptions. It has been consistently gaining share in the real estate industry, particularly in the commercial segment.</p><p>We believe its investment in homes.com could further boost its presence in the residential market.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Polen Capital on elf Beauty $ELF US</strong></h3><p><strong>Thesis:</strong><br />Elf Beauty is poised for growth with its innovative, affordable products and expanding market presence—don't miss why this U.S. brand is set to soar 25% in EPS long term.</p><p><strong><a href="https://www.polencapital.com/sites/default/files/Polen_Global-SMID-Company-Growth_Commentary.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.polencapital.com/sites/default/files/Polen_Global-SMID-Company-Growth_Commentary.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />We initiated a position in elf Beauty, a cosmetics company we were able to opportunistically add after the market reacted negatively to Q2Q4 earnings despite compelling results. We see elf as uniquely positioned due to its reputation for quality and innovation and considerably lower prices than other mass cosmetics brands.</p><p>Elf's brand awareness is still adding shelf space, expanding its product portfolio, and entering the skincare market. It is still a U.S.-focused business, with some early signs of international success. The company’s financial profile is robust, and we expect EPS to grow 25% over the long term.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Polen Capital on Exlservice $EXLS US</strong></h3><p><strong>Thesis:</strong><br />Exlservice is leading the charge in data transformation with 95% renewal rates and strong AI partnerships—discover why this overlooked tech player is a must-watch.</p><p><strong><a href="https://www.polencapital.com/sites/default/files/Polen_Global-SMID-Company-Growth_Commentary.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.polencapital.com/sites/default/files/Polen_Global-SMID-Company-Growth_Commentary.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />We initiated a position in Exlservice, a business process outsourcing company that we think has become a leader in data services over time. Exlservice is a diversified business with 95% customer renewal rates and four-to-five-year contracts.</p><p>The company is experiencing strong demand from customers attempting to determine how to best clean up and structure data to participate in the next stages of digital transformation, including generative AI ("GenAI"). Simultaneously, the company invests heavily in developing GenAI-enabled tools and recently announced partnerships with Microsoft and AWS to co-develop AI solutions and accelerate go-to-market plans.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>RS Investments on FedEx $FDX US</strong></h3><p><strong>Thesis:</strong><br />FedEx's strategic focus on efficiency and capital discipline charts a path to sustained profitability—explore its long-term potential.</p><p><strong><a href="https://www.vcm.com/assets/strategies/managercommentary/RS%20Large%20Cap%20Val%20Strategy%20COM.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.vcm.com/assets/strategies/managercommentary/RS%20Large%20Cap%20Val%20Strategy%20COM.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />FedEx Corporation (FDX) delivers packages and freight through a global network. Recently, the company embarked on an effort to improve its margins and return on invested capital (ROIC).</p><p>FedEx identified structural costs and excess capital expenditures that it believed it could remove to transition its business to a higher ROIC entity. The company has made progress with these efforts, but a slower macro economy this quarter resulted in lower-than-expected volumes, particularly premium-priced volumes. However, we continue to own shares as we believe that FedEx is making progress on its journey to becoming a higher ROIC business, which eventually will provide outperformance to our fund holders.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>THB AM on Hawkins $HWKN US</strong></h3><p><strong>Thesis:</strong><br />Hawkins leverages strategic acquisitions and cost synergies to dominate niche markets and drive robust cash flow growth.</p><p><strong><a href="https://www.vcm.com/assets/strategies/managercommentary/THB%20Small%20Cap%20Core%20Strategy%20COM.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.vcm.com/assets/strategies/managercommentary/THB%20Small%20Cap%20Core%20Strategy%20COM.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />Hawkins, Inc. is a recent addition to the strategy that highlights how the prudent use of acquisitions can enable companies to expand their addressable market and scale their operations. Hawkins is the 10th largest specialty chemical and ingredient company in North America and the 30th largest globally. Specializing in formulating, manufacturing, blending, and distributing products for Industrial, Water Treatment, and Health & Nutrition sectors, the company is expanding through acquisitions, particularly focusing on growing its higher-margin water treatment business, which has now become the largest reporting segment following 11 acquisitions since 2021. Hawkins differentiates itself through its value-added services, such as custom manufacturing and toll blending, supported by tailored and strong customer service through a robust network of 60 facilities in 27 states. By leveraging synergies between the industrial and water treatment segments, the company optimizes costs through bulk purchasing of raw materials and shared resources, thereby leveraging fixed costs effectively and creating a competitive cost advantage, positioning itself to generate robust cash flow for future growth and expansion opportunities.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Orbis on HDFC Bank $HDB US</strong></h3><p><strong>Thesis:</strong><br />HDFC Bank combines robust market share growth and a strategic merger, presenting a compelling value opportunity amidst temporary earnings pressure.</p><p><strong><a href="https://www.orbis.com/uk/institutional/insights/commentaries/quarterly/2024/q3/emerging">Extract from their Q3 letter,</a></strong><a href="https://www.orbis.com/uk/institutional/insights/commentaries/quarterly/2024/q3/emerging"> link here.</a></p><p><strong>Analysis:</strong><br />As we discussed in June, we recently initiated a position in India’s largest private lender, HDFC Bank, which now accounts for almost 2% of Orbis EM Equity. India is one of the few markets where government-owned banks continue to account for the majority (roughly 60%) of the banking system. That creates an attractive setup for private lenders, who have consistently and profitably gained market share by offering a better proposition for customers in an under-banked market.</p><p>As the strongest retail bank in the country with a reliable track record in credit underwriting, HDFC Bank has led this trend and for some time was a market darling with a premium valuation to match. However, sentiment towards the company has soured in recent years due to its decision to merge with the mortgage business of its erstwhile parent, HDFC Limited—a move complicated by a challenging operating environment with tighter liquidity orchestrated by the local central bank. The market's focus on weak near-term earnings due to this transient issue has allowed us to establish a position at what we regard as an attractive price. Shares in HDFC Bank currently trade at 17 times its profits, which we believe are depressed due to the upfront costs of its merger.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Madison Funds on Honeywell $HON US</strong></h3><p><strong>Thesis:</strong><br />Honeywell's innovation in recurring revenue streams and industrial automation positions it as a resilient growth and dividend powerhouse.</p><p><strong><a href="https://madisonfunds.com/wp-content/uploads/MadisonDividendIncome-ISL.pdf">Extract from their Q3 letter,</a></strong><a href="https://madisonfunds.com/wp-content/uploads/MadisonDividendIncome-ISL.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />This quarter we are highlighting Honeywell (HON) as a relative yield example in the Industrials sector. HON is a premier industrial conglomerate with leading businesses in commercial aerospace, industrial automation, energy sustainability solutions, and building automation. A common theme across these end markets is that HON embeds its products into the operations of its customers, which generates recurring revenue from aftermarket products/services and leads to high customer switching costs. We believe HON has a sustainable competitive advantage due to its wide installed base of equipment, strong reputation, pricing power, high customer switching costs, and technological expertise.</p><p>Our thesis on HON is that it appears well-positioned for consistent growth, driven by a recovery in commercial aerospace following the Covid pandemic, coupled with favorable secular trends in automation, remote security management, and energy savings in buildings. The company made a strategic shift in recent years away from lumpy product sales towards connected systems and software, which lowers cyclicality and increases recurring revenues; we estimate that 30% of revenues are recurring in nature. This focus on software and recurring revenues has resulted in strong returns on invested capital (ROIC) over time that have easily exceeded the company’s weighted average cost of capital (WACC), something we expect to continue for years to come.</p><p>The fund originally purchased HON during the pandemic and added to the position in June 2024, after it reached a historically cheap relative valuation. As shown in the graph below, at the time of the most recent position increase, HON had a 2.3% dividend yield (top panel) and a relative dividend yield of 1.65x the S&P 500 (bottom panel), which was an all-time high. Based on this valuation metric, HON had never been cheaper compared to the overall market. The company has an A-rated balance sheet by Standard & Poor’s and is a Dividend Aristocrat that has increased its dividend each year since 1992. Over the past five years, HON has increased its dividend an average of 6% per year. We expect similar dividend increases in the future, which will help grow income and protect against inflation.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Polen Capital on Insight Enterprises $NSIT US</strong></h3><p><strong>Thesis:</strong><br />Insight Enterprises leverages strong customer relationships and cloud expertise for 18% EPS growth—explore its pivotal role in IT's next wave.</p><p><strong><a href="https://www.polencapital.com/sites/default/files/Polen_US-Small-Company-Growth_Commentary.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.polencapital.com/sites/default/files/Polen_US-Small-Company-Growth_Commentary.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />Insight Enterprises is a global IT solutions provider to small- and medium-sized businesses across various end markets. Insight has developed capabilities in hardware management and software and services and has also demonstrated an impressive long-term track record of double-digit returns on invested capital and robust free cash flow generation.</p><p>The company is poised to benefit from returning to normal IT spending levels in the coming years as companies prioritize hardware upgrades and continue migrating workloads to the cloud. We estimate Insight will compound EPS at 18% over the next five years, driven by its deep customer relationships and leading cloud services business.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Hotchkis & Wiley on Kosmos $KOS US</strong></h3><p><strong>Thesis:</strong><br />Kosmos Energy's offshore expertise and undervaluation offer compelling upside amid evolving energy dynamics.</p><p><strong><a href="https://www.hwcm.com/wp-content/uploads/2019/10/HW-MCV-3Q24-Strategy-Commentary.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.hwcm.com/wp-content/uploads/2019/10/HW-MCV-3Q24-Strategy-Commentary.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />Kosmos (KOS) is an independent E&P focused offshore in the US Gulf of Mexico, Ghana, and Equatorial Guinea. Shares were pressured over the period as oil prices continued to decline, driven by worries surrounding OPEC+ barrels returning to the market, coupled with slowing demand.</p><p>We believe the company is competitively advantaged due to the expertise required to explore, discover, and operate assets offshore. Additionally, the company also has LNG assets, an exploration portfolio, and a platform to acquire and operate additional offshore resources.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Rewey AM on Kyndryl Holdings $KD US</strong></h3><p><strong>Thesis:</strong><br />Kyndryl’s aggressive transformation and undervaluation signal 94% upside potential—learn why its focus on high-margin contracts is game-changing.</p><p><strong><a href="https://www.reweyassetmanagement.com/_files/ugd/064a66_0ae3d0f0b54e4d87beae04a545692dba.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.reweyassetmanagement.com/_files/ugd/064a66_0ae3d0f0b54e4d87beae04a545692dba.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />We continue to see significant neglect and undervaluation in shares of Kyndryl (KD), a position that shows 94% upside to our AFV price target of $44.60 per share. Kyndryl is a $5.5 billion market cap designer, builder, manager, and modernizer of mission-critical information technology infrastructure systems, including public, private, and multi-cloud environments. KD was spun out of IBM in November 2021. Since the spin, KD has been aggressively repositioning its business by shedding unprofitable legacy IBM contracts, partnering with leading technology companies like MSFT, GOOGL, AMZN, SAP, and others, and optimizing its cost structure. KD has maintained a very strong financial profile with ample flexibility to show strong revenue, earnings, and free cash flow growth. Its FY2025 free cash flow expectations and business transitions underscore its growth potential, while the shares remain undervalued.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Mar Vista on Linde PLC $LIN US</strong></h3><p><strong>Thesis:</strong><br />Linde's leadership in industrial gases and hydrogen offers long-term growth amid short-term market weakness—discover why now is a great entry point.</p><p><strong><a href="https://marvistainvestments.com/wp-content/uploads/2024/11/MVIP-Focus-3Q24-Commentary-Final.pdf">Extract from their Q3 letter,</a></strong><a href="https://marvistainvestments.com/wp-content/uploads/2024/11/MVIP-Focus-3Q24-Commentary-Final.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />Linde PLC is the world’s largest global industrial gas producer. The company enjoys the highest profit margins and returns on capital in the industry. Linde’s primary products are atmospheric gases and process gases. Industrial gases have benefitted from secular growth trends in decarbonization and carbon sequestration. Moreover, the opportunity in blue and green ammonia and hydrogen are substantial. Projects in these areas are quickly being added to its backlog for future growth. We see these secular trends as long-term positives for Linde and the entire industrial gas industry.</p><p>Linde believes it can grow its volumes with new applications, the buildout of small, on-site plants using its technologies, and focusing on growing geographies such as India, Malaysia, Vietnam, China, and Brazil. Despite the long-term growth opportunities, recent demand trends have slowed due to weak global industrial production and a challenging year-over-year comparable. Among the regions, the U.S. remains resilient, with volumes flat to slightly negative. Europe, Latin America, the Middle East, and China are all sending mixed to negative economic signals. We believe these slower trends are transitory in nature, providing an opportunity to purchase shares in Linde at attractive prices.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Riverwater Partners on Mama's Creations $MAMA US</strong></h3><p><strong>Thesis:</strong><br />Mama's Creations capitalizes on fresh food growth and Costco partnerships, showcasing robust margins and scalable market opportunities.</p><p><strong><a href="https://riverwaterpartners.com/wp-content/uploads/2024/10/Riverwater-Q3-2024-Micro-Opportunities-Update.pdf">Extract from their Q3 letter,</a></strong><a href="https://riverwaterpartners.com/wp-content/uploads/2024/10/Riverwater-Q3-2024-Micro-Opportunities-Update.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />We also initiated a position in Mama's Creations, Inc. (MAMA), which together with its subsidiaries, manufactures and markets fresh deli-prepared foods primarily in the United States. The company offers beef and turkey meatballs, meat loaf, chicken, sausage-related products, and pasta entrees.</p><p>MAMA recently won new business with Costco that will be rolling out this year. While the center aisles of the grocery store have been in secular decline, MAMA has focused on the deli/fresh food section, which has been growing 8–10% a year. Management has done a good job turning around the business from low teens gross margins to the high twenties, resulting in consistent high teens/low twenties ROIC.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Newbridge AM on McKesson Corporation $MCK US</strong></h3><p><strong>Thesis:</strong><br />McKesson's specialty pharma growth and healthcare distribution leadership position it as a resilient player amid evolving industry trends.</p><p><strong><a href="https://www.vcm.com/assets/strategies/managercommentary/NB%20Large%20Cap%20GRO%20Strategy%20COM.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.vcm.com/assets/strategies/managercommentary/NB%20Large%20Cap%20GRO%20Strategy%20COM.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />McKesson Corporation (MCK) is the largest distributor of pharmaceuticals and medical supplies in the United States. Its extensive network and scale provide competitive advantages and stability to its financial returns. At first blush, the drug distribution business may not be considered an attractive business model given its low margins. However, MCK has established itself as the leader among the major distributors and has shown very stable and consistent financial metrics with good visibility and limited competitive share shifts over time. McKesson also has a large and growing specialty pharmaceutical business, which grows faster and carries higher margins than their core business. With revenue over $30 billion, MCK is the second largest distribution player in specialty pharmaceutical products and services.</p><p>Finally, MCK provides various services within its business units such as Health Mart (MCK's pharmacy network), OneStop Generics (MCK's generics purchasing program), Northstar Rx (MCK's private label generics unit), and ClarusONE (a joint venture with Walmart to source generics). Historically, McKesson has shown consistent revenue growth, effective cost management, and above-average profitability. Following more recent investments in faster-growing and higher-margin businesses, coupled with the recent exit from their European businesses, MCK has become a cleaner story supporting the potential for a further re-rating of shares.</p><p>The healthcare industry's growth is driven by factors such as an aging population, increasing healthcare needs, and advancements in medical technologies. McKesson is positioned to benefit from these secular trends given its extensive distribution network and early investments into faster growth areas within Specialty and Prescription Technologies. As a key player in the pharmaceutical distribution and healthcare supply chain, McKesson is integral to the healthcare ecosystem. While McKesson operates in a heavily regulated industry, it has the experience vital to navigating these regulatory environments favorably. Assessing how well the company manages future regulatory risks and market challenges is essential to maintaining its position in the portfolio.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Parnassus on MercadoLibre $MELI US</strong></h3><p><strong>Thesis:</strong><br />MercadoLibre leads Latin America's e-commerce and fintech revolution, leveraging its logistics dominance to drive unmatched growth.</p><p><strong><a href="https://content.parnassus.com/094ee837-48bb-001c-6959-053670061ebf/b1aaffe5-217b-4811-a7fe-bb3dd9e754b3/Parnassus%20Growth%20Equity_Commentary_3Q24_Final.pdf">Extract from their Q3 letter,</a></strong><a href="https://content.parnassus.com/094ee837-48bb-001c-6959-053670061ebf/b1aaffe5-217b-4811-a7fe-bb3dd9e754b3/Parnassus%20Growth%20Equity_Commentary_3Q24_Final.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />MercadoLibre benefits from the ongoing transition from offline to online shopping, along with the growing adoption of digital financial services in Latin America. With its strong brand, robust logistics network, dominant market share, and top-tier management team, the company is well-positioned to sustain revenue growth and margin expansion.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Newbridge AM on Monolithic Power Systems $MPWR US</strong></h3><p><strong>Thesis:</strong><br />Monolithic Power Systems leverages AI-driven demand for cutting-edge power solutions—find out why its innovation fuels sustainable growth.</p><p><strong><a href="https://www.vcm.com/assets/strategies/managercommentary/NB%20Large%20Cap%20GRO%20Strategy%20COM.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.vcm.com/assets/strategies/managercommentary/NB%20Large%20Cap%20GRO%20Strategy%20COM.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />Monolithic Power Systems, Inc. (MPWR) designs, develops, and sells integrated solutions and power delivery architectures for computing, storage, industrial, and consumer markets.</p><p>As AI continues to penetrate existing verticals, power management gains increasing importance within the evolution of power-hungry AI compute environments. MPWR's best-of-breed solutions continue to gain share with design wins in AI PC and storage markets, driving performance and sustainable growth.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Polen Capital on Paylocity $PCTY US</strong></h3><p><strong>Thesis:</strong><br />Paylocity's resilient HCM platform offers long-term growth potential—see how mid-teen EPS compounding could redefine this undervalued gem.</p><p><strong><a href="https://www.polencapital.com/sites/default/files/Polen_US-Small-Company-Growth_Commentary.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.polencapital.com/sites/default/files/Polen_US-Small-Company-Growth_Commentary.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />Paylocity is a cloud-based provider of payroll and broader human capital management ("HCM") software solutions to small- and medium-sized businesses. Shares declined and traded off materially after our sale due to widespread market pullback and lapping difficult COVID-driven comps, among other factors.</p><p>More recently, the company has been weighed down by economic and employment concerns, as well as issues for competitor Paycom. Paylocity's suite of solutions and distribution capabilities remain competitively advantaged and can continue to expand market share and wallet share for years. We believe earnings currently present an attractive risk-reward and see EPS compounding at a mid-teens rate as ex-float sales growth stabilizes at a new normal, margins expand on SG&A leverage, and management returns capital to shareholders through a substantial buyback program.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Polen Capital on Rambus $RMBS US</strong></h3><p><strong>Thesis:</strong><br />Rambus drives innovation in memory architecture with a fabless model and strong cash flow growth—discover why its 15%-17% compounding potential is a game-changer.</p><p><strong><a href="https://www.polencapital.com/sites/default/files/Polen_US-Small-Company-Growth_Commentary.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.polencapital.com/sites/default/files/Polen_US-Small-Company-Growth_Commentary.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />Rambus is a provider of memory interface chips and silicon intellectual property ("IP") that serves large memory Original Equipment Manufacturers ("OEMs") and hyperscalers. The company generates its revenue through a combination of licensing fees and product sales.</p><p>Rambus operates a fabless business model, leading to robust returns on capital and free cash flow generation. This model also enables continuous reinvestment into R&D as well as returning cash to shareholders. We estimate Rambus can compound earnings and free cash flow per share at 15%-17% through a cycle.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Artisan Partners on Schlumberger $SLB US</strong></h3><p><strong>Thesis:</strong><br />Schlumberger and Diamondback Energy combine operational excellence and shareholder returns, making them resilient plays in a volatile energy market.</p><p><strong><a href="https://www.artisanpartners.com/content/dam/documents/quarterly-commentary/vxus/2024/3q/ValueIncome-QCommentary-3Q24-vXUS.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.artisanpartners.com/content/dam/documents/quarterly-commentary/vxus/2024/3q/ValueIncome-QCommentary-3Q24-vXUS.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />Given weakness in the broader energy sector, we were able to purchase Schlumberger, the world’s largest oil services company, and Diamondback Energy, a US exploration and production company operating exclusively in the Permian Basin of southwest Texas, at attractive prices.</p><p>Schlumberger has a history of successfully navigating market volatility and delivering on its free cash flow and profit margin growth objectives from a combination of activity growth and pricing gains. Diamondback Energy is a low-cost producer with low capital and operating costs, critical to its ability to generate strong returns on equity and free cash flow. Both companies return excess cash to shareholders through a combination of share buybacks and dividends.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Polen Capital on Tetra Tech $TTEK US</strong></h3><p><strong>Thesis:</strong><br />Tetra Tech's leadership in water infrastructure and environmental consulting positions it perfectly for today's rising demand—learn how it’s capitalizing on global challenges.</p><p><strong><a href="https://www.polencapital.com/sites/default/files/Polen_Global-SMID-Company-Growth_Commentary.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.polencapital.com/sites/default/files/Polen_Global-SMID-Company-Growth_Commentary.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />We initiated a new position in Tetra Tech, an environmental consulting business we've followed in our library for several years. Tetra Tech is focused on water and water infrastructure-related consulting and is a significant player in environmental, renewable energy, sustainable infrastructure, and international development.</p><p>About 30% of the revenue comes from long-term projects from the federal government, another 11% from state and local, and a portion from disaster response and international aid. Between significant infrastructure spending, the potential for widespread PFAS cleanup, water scarcity, and changing environmental conditions, we believe the demand backdrop for Tetra Tech is improving, creating an attractive investment opportunity.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Polen Capital on TopBuild $BLD US</strong></h3><p><strong>Thesis:</strong><br />TopBuild capitalizes on housing tailwinds with impressive margins and EPS growth—uncover why this insulation leader is a standout performer.</p><p><strong><a href="https://www.polencapital.com/sites/default/files/Polen_Global-SMID-Company-Growth_Commentary.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.polencapital.com/sites/default/files/Polen_Global-SMID-Company-Growth_Commentary.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />We initiated a new position in TopBuild, a company focused on U.S. insulation distribution and installation services in the residential construction, commercial, and mechanical insulation markets. TopBuild is a company with 15%+ EPS growth, ~20% EBITDA margin, and a 20%+ Return on Invested Capital and Cash Flow Return on Invested Capital, as well as a history of improving returns since its 2015 spinoff from Masco.</p><p>Overall, we believe both businesses offer exposure to secular tailwinds from years of underbuilding in new homes and a high-return business model that should prove more resilient than traditional homebuilders. We funded the new position in TopBuild by reducing our cash position.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Royce IP on Transcat $TRNS US</strong></h3><p><strong>Thesis:</strong><br />Transcat's focus on scalable services, automation, and strategic acquisitions positions it for significant market share growth in high-value sectors.</p><p><strong><a href="https://www.royceinvest.com/insights/2024/4Q24/two-high-conviction-micro-cap-holdings">Extract from their Q3 letter,</a></strong><a href="https://www.royceinvest.com/insights/2024/4Q24/two-high-conviction-micro-cap-holdings"> link here.</a></p><p><strong>Analysis:</strong><br />I'd highlight a business with many of these ‘Emerging Quality’ characteristics called Transcat. The company excels by providing recurring calibration, inspection, maintenance, and other offerings through a network of service centers while distributing complementary test and measurement equipment to similar customers, primarily in the life science, aerospace & defense, and manufacturing sectors. Some of its differentiating features include an independent service model, lower cost to acquire customers, the ability to attach calibration services at the initial sale, and scale-driven service quality in regulated markets with a high cost of failure. While secular trends toward outsourcing, service specialization, and growing regulatory requirements are propelling market growth, we also really appreciate Transcat's ability to gain share. In the fragmented market for third-party services, the company drives scale economies through growing penetration of automated workstreams, remote monitoring, and continued acquisition of regional or specialist competitors.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Liontrust on TransMedics $TMDX US</strong></h3><p><strong>Thesis:</strong><br />TransMedics revolutionizes organ transplantation with advanced care systems, unlocking untapped donor pools and saving lives.</p><p><strong><a href="https://www.liontrust.co.uk/insights/monthly-comms/2024/10/liontrust-gf-sf-multi-asset-global-fund-q3-2024-review">Extract from their Q3 letter,</a></strong><a href="https://www.liontrust.co.uk/insights/monthly-comms/2024/10/liontrust-gf-sf-multi-asset-global-fund-q3-2024-review"> link here.</a></p><p><strong>Analysis:</strong><br />We also added the US company TransMedics under our investment theme of "Enabling innovation in healthcare." Already held in the Liontrust GF SF US Growth Fund, we believe TransMedics is changing the face of organ transplants as a company that makes organ transplant modules and facilitates a US-based organ transportation service.</p><p>TransMedics developed a variety of "organ care system (OCS)" that keeps organs in a dynamic state—i.e., working in a near physiologic state—versus the current standard of care known as cold storage. This expands the pool of organs that were not able to be assessed and often thrown out, particularly from older donors.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>RS Investments on UMB Financial Corporation $UMBF US</strong></h3><p><strong>Thesis:</strong><br />UMB Financial's strategic acquisition and efficient operations make it a resilient performer in a challenging banking environment.</p><p><strong><a href="https://www.vcm.com/assets/strategies/managercommentary/RS%20Small%20Cap%20Val%20Strategy%20COM.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.vcm.com/assets/strategies/managercommentary/RS%20Small%20Cap%20Val%20Strategy%20COM.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />UMB Financial Corporation (UMBF) is a regional bank with banking centers throughout the Midwest and central plains states. The bank serves commercial, consumer, and private wealth clients, managing over $40 billion in assets. The combination of a sticky low-cost deposit franchise with a strong credit culture and a high percentage of revenue generated from its fee-based businesses provides a consistent and predictable base level of cash flows. In addition, the company recently announced the acquisition of Heartland Financial, a $20 billion asset regional bank that will increase density in UMBF's existing markets as well as expand into attractive new geographies. This acquisition provides UMBF with the opportunity to attain greater efficiency and to optimize a historically under-levered balance sheet.</p><p>The shares outperformed in the third quarter as management continued to deliver solid results in a challenging interest rate environment for banks. We believe UMBF is in the early innings of improving the returns on its business. Falling interest rates and a positive sloping yield curve would be additional positives for the bank, and we continue to hold the name.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Mar Vista on Visa $V US</strong></h3><p><strong>Thesis:</strong><br />Visa's financial strength and relentless focus on cashless transactions highlight its potential to grow intrinsic value by 10-13% over the next five years.</p><p><strong><a href="https://marvistainvestments.com/wp-content/uploads/2024/11/MVIP-Focus-3Q24-Commentary-Final.pdf">Extract from their Q3 letter,</a></strong><a href="https://marvistainvestments.com/wp-content/uploads/2024/11/MVIP-Focus-3Q24-Commentary-Final.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />After lagging the broader markets over the last one, three, and five years, we believe Visa's stock now reflects a more conservative and realistic expectation for future cash flow growth. The electronic transaction toll-taker has long enjoyed a highly defensible network effect that connects global buyers and sellers and scale advantages that keep upstart competitors from disrupting the industry's economics. At the same time, Visa directly benefits from the secular trend of replacing cash with e-payments. Penetration rates and transaction volumes in developed markets will inevitably slow over the next five years, yet we expect Visa revenues to grow 8-10% over our investment horizon. Key value drivers remain global consumer spending growth, e-transaction penetration, “new flows” expansion in areas like business-to-business transactions, and lastly, value-added client service growth.</p><p>Visa's dominant position is reflected in its nearly pristine financials: 68% operating margins, greater than 70% incremental operating margins, and only 3-4% capital expenditures as a percent of sales. Awash in excess capital, Visa is one of the more aggressive purchasers of its own stock. Shares outstanding over the last fifteen years have declined by one-third and we expect the company to continue to repurchase 2-3% of shares outstanding annually.</p><p>Since the 2016 acquisition of Visa Europe, total returns on capital have expanded from 25% to 50%, and we expect the metric to approach 100% over the next five years as net operating profits expand roughly 60% on a flat capital base. Overall, Visa should compound per share intrinsic value at 10-13% over the next five years.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Mayar Capital on Visa $V US</strong></h3><p><strong>Thesis:</strong><br />Visa's global network effect and cashless payment dominance fuel 20% income growth—learn why innovation and scalability keep it at the forefront.</p><p><strong><a href="https://docsend.com/view/tezczg53i5rriaai/d/73bdknbzs7kkp9qf">Extract from their Q3 letter,</a></strong><a href="https://docsend.com/view/tezczg53i5rriaai/d/73bdknbzs7kkp9qf"> link here.</a></p><p><strong>Analysis:</strong><br />Visa's business model is fairly simple: in a transaction between a consumer and a merchant, Visa acts as an intermediary between their respective banks, charging a small network fee based on the transaction amount. This network, called 'VisaNet,' allows banks to transfer payments securely, reliably, and efficiently. Without Visa, banks would need to establish individual relationships with each other, creating a costly and inefficient system. Visa's interchange system streamlines the process, reducing costs and risks for all parties.</p><p>The more banks Visa connects, the more valuable its interchange system becomes. This creates a powerful network effect—a classic example taught in business schools. Because Visa and Mastercard dominate the cashless payment landscape, they are often viewed as a duopoly by regulators.</p><p>Visa's wide economic moat, combined with the ongoing shift towards cashless payments, has generated impressive returns for shareholders. Since its IPO in 2008, annualized returns have averaged 18%. This growth is fueled by a steady decline in cash usage and a surge in card transactions, a trend accelerated by the 2020 pandemic.</p><p>Consequently, Visa's payment volume has skyrocketed from USD 4.4 trillion in 2008 to USD 15.4 trillion in 2023, processing 276 billion transactions—a 9% growth rate.</p><p>This translates to an 11% annual revenue growth and a remarkable 20% annual growth in operating income, thanks to strong operating leverage.</p><p>Even better is that the business has been able to grow profits so significantly without having to heavily reinvest in the business—returns on invested capital have averaged an impressive 65% over the past two decades. The high rate at which the business translates accounting profit into cash has allowed it to reduce its share count by a third since its IPO, on top of returning $24 billion in cash to shareholders by way of dividends.</p><p>While innovation remains central to Visa's strategy, the focus is on adapting its network to emerging payment trends rather than radical overhauls. For instance, its tokenization technology enhances security by replacing sensitive card information with unique digital tokens, effectively reducing online transaction fraud.</p><p>By the end of 2023, Visa had issued more than 7.5 billion tokens, reflecting its efforts to keep pace with the growing demand for secure digital transactions. We like this approach to innovation: if Visa can continue to do its best to "future-proof" the business by exploring new technologies, the powerful network should continue to produce significant profits well into the future.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Orbis on Kasikornbank $KBANK TB</strong></h3><p><strong>Thesis:</strong><br />Kasikornbank’s balance sheet cleanup and undervaluation create an attractive entry point with potential for strong dividend growth.</p><p><strong><a href="https://www.orbis.com/uk/institutional/insights/commentaries/quarterly/2024/q3/emerging">Extract from their Q3 letter,</a></strong><a href="https://www.orbis.com/uk/institutional/insights/commentaries/quarterly/2024/q3/emerging"> link here.</a></p><p><strong>Analysis:</strong><br />Kasikornbank, the second-largest commercial bank in Thailand, represents close to a 3.5% position in the portfolio. Investors have broadly neglected Thai banks due to concerns about uncertain politics and the tourism-heavy Thai economy struggling to recover from COVID.</p><p>Kasikornbank has proactively cleaned up its balance sheet, writing off approximately 10% of its loans over the last two years. Once credit costs normalize, the company should deliver a low double-digit return on equity and pay out at least 50% of its earnings as dividends. Shares currently trade at just 0.7 times book value and 7 times earnings, making it a compelling investment opportunity.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Royal London AM on ME Group $MEGP LN</strong></h3><p><strong>Thesis:</strong><br />ME Group leverages its profitable photobooth business to fund high-growth laundry services—discover why this hidden gem is undervalued by the market.</p><p><strong><a href="https://www.rlam.com/globalassets/media/literature/funds/fund-commentaries/2024/september/equities/uk-smaller-companies-fund.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.rlam.com/globalassets/media/literature/funds/fund-commentaries/2024/september/equities/uk-smaller-companies-fund.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />ME Group designs and operates a network of automated self-service vending machines, with an installed base across Western Europe (France and the UK in particular) as well as Japan. Profits are mostly generated from photobooths and laundry machines, with the latter being a faster-growing, less mature market with substantial opportunity for growth—comfortably funded by the cash flow from the mature photobooth business.</p><p>The company generates substantial returns on capital, and the low double-digit earnings multiple does not reflect the earnings quality nor the growth opportunity.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Royal London AM on Niox $NIOX LN</strong></h3><p><strong>Thesis:</strong><br />Niox's cutting-edge asthma diagnostics and recurring revenue model make it a scalable, cash-rich Medtech leader poised for growth.</p><p><strong><a href="https://www.rlam.com/globalassets/media/literature/funds/fund-commentaries/2024/september/equities/uk-smaller-companies-fund.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.rlam.com/globalassets/media/literature/funds/fund-commentaries/2024/september/equities/uk-smaller-companies-fund.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />Niox is an innovative Medtech company, the market leader in medical devices used to measure FeNO (Fractional exhaled Nitric Oxide) in asthma patients. The technology is increasingly being included in the diagnostic pathway by key opinion leaders and clinical advisory bodies around the world.</p><p>The high proportion of revenues from the sale of consumables (which repeat annually), and their distributor-focused sales model, makes the business model highly cash generative and scalable.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Royal London AM on Urban Logistics $SHED LN</strong></h3><p><strong>Thesis:</strong><br />Urban Logistics delivers steady rental growth and value creation in last-mile assets—see why this REIT trades at a 30% discount to NAV.</p><p><strong><a href="https://www.rlam.com/globalassets/media/literature/funds/fund-commentaries/2024/september/equities/uk-smaller-companies-fund.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.rlam.com/globalassets/media/literature/funds/fund-commentaries/2024/september/equities/uk-smaller-companies-fund.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />Urban Logistics owns and operates a portfolio of single-let warehouse assets used for “last mile” logistics. These assets are in short supply given competing use cases for land in these locations, which is why they have a long history of growing rental income and expect above-inflation rental growth over the medium term.</p><p>The REIT has a conservative balance sheet and is trading at a highly attractive c. 30% discount to Net Asset Value.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h3><strong>Artisan Partners on MGM China Holdings $2282 HK</strong></h3><p><strong>Thesis:</strong><br />MGM China's robust gaming growth and disciplined margins highlight its strength amidst macro challenges—explore its cash flow-driven dividend potential.</p><p><strong><a href="https://www.artisanpartners.com/content/dam/documents/quarterly-commentary/vxus/2024/3q/ValueIncome-QCommentary-3Q24-vXUS.pdf">Extract from their Q3 letter,</a></strong><a href="https://www.artisanpartners.com/content/dam/documents/quarterly-commentary/vxus/2024/3q/ValueIncome-QCommentary-3Q24-vXUS.pdf"> link here.</a></p><p><strong>Analysis:</strong><br />MGM China Holdings is a leading owner and operator of casinos in China (Macau and Cotai) and majority-owned by US-based MGM Resorts International. Shares had been under pressure along with other casino operators due to concerns about China’s economy and a slowdown in gross gaming revenues.</p><p>However, MGM’s Q2 operating results were strong, with 37% growth in gross gaming revenues and cost discipline driving margin expansion and substantial free cash flow generation. Due to the outsized cash flow, its board announced a special dividend of HKD 0.353 per share, equating to a dividend yield of about 3.4% based on the stock price at the time of purchase.</p><p><strong><a href="https://finchat.io/?via=tom">Check here for the latest results, quarterly call and analysts' estimates.</a></strong></p><div><hr /></div><h4>Here are some additional Q3 letters :</h4><p><br /><br /></p><p><em>Everything you read here is for information purposes only and is not an investment recommendation.</em></p><div class="subscription-widget-wrap-editor"><div class="subscription-widget show-subscribe"><div class="preamble"><p class="cta-caption">Thanks for reading Stock Analysis Compilation! 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