r/investing
My value picks for the rest of the year
Author shares a value model based on growth, margins, and EV multiples, holding MU, NVDA, GOOGL, LLY, MSFT, META with 65.8% YTD returns.
- Custom valuation model identifies undervalued stocks with strong growth and margins.
- Portfolio has achieved a massive 65.8% YTD return, proving the model's effectiveness.
- Model recommends holding despite recent market pullbacks.
I've posted numerous times that I compare the projected revenue growth and trailing operating margin to the enterprise multiple to calculate what I call a Value Score. The median Value Score for all stocks is about 1.0. If a stock has a Value Score above 2.0, I consider it for a buy.
My current portfolio, and what has give me a 65.8% YTD return, is MU, NVDA, GOOGL, LLY, MSFT and META. Despite Friday's pullback, my model says keep holding.
If you are a bot and want to slam me, please show me your portfolio.
Yeah I'm sorry but MU , GOOGL, LLY have all been fantastic for me this year but they are not "value" at this point at all.
Serious question: Isn't value when you buy a great company at a reasonable price? Even if your value scores are above 2, if price is too high its too high, right?
Can you explain your approach to this? I reviewed the spreadsheet, but I didn't get everything tbh.
That because these are the same stocks being posted for years. Nothing unique about this one.
Value is buying a company at a price which is below its earnings potential within the time period that you are willing to own it. The value is the difference between today's price and what the company can earn. A company could be trash and headed for bankruptcy, but if you can buy it at a price below what it can earn before bankruptcy, or below its liquidation value, then it still has value.
How do you define a great price? For me, that is the pricing multiple is low relative to its projected performance. That is exactly what I am doing.
A company with a 50% projected revenue growth and 50% operating margin should trade at a higher multiple than a company with 25% projected revenue growth and 25% operating margin.
I don't look at P/E because every company manipulates that ratio with stock buybacks. Private equity investors look at Enterprise Value to either Operating Profit or Free Cash Flow. Real estate investors look at the inverse to this and call it Cap Rate.
Allright, thanks for clearing that up.
Idk brother, numbers don’t always tell the whole story.
The Value Points formula is entirely dependent on the accuracy of forward revenue growth projections. Those projections are aggressive, most egregiously Micron. You’re really going to extrapolate a 60% single-year growth assumption during what may be a peak memory cycle? Applying those same peak-cycle growth assumptions alongside peak TTM operating margins is just doubling down on cyclical optimism. A single cycle turn would collapse this portfolio.
The bulk of this portfolio depends on a single optimistic macro assumption about AI-driven demand holding at current levels.
It’s not really value investing.
The growth projection is the median of 39 professional analysts, which comes partly from the company's guidance. I can't think of a better source for the revenue forecast unless you have a direct line to their biggest customers.
Cisco, Lucent, had wildly bullish growth forecasts going into 2000 as well. So did Lennar and KB Home going into 2008.
More than half of Microns total revenue in 2025 came from only ten customers. They explicitly warned that a disruption in any top customer relationship could negatively impact their entire industry. If one or two of Micron’s mega customers pulls back on orders, that value formula can snap very quickly.
The exact same thing happened to Micron in 2000.
It’s not a value pick just because it looks cheap.
Then what are you buying?
Yes, lots of companies have non-calendar aligned fiscal years. My question is why not use a growth projection based on ttm revenue, or blend the projections for the remainder of this calendar year with that of next calendar year in order to create a rolling 12 month projection?
And I don't see a way to run a screen which includes either fiscal or calendar year revenue, only ttm revenue. Either paid versions have more options, sites that I didn't check have more options, the data is entered manually, or the data was scraped. It isn't just an easy screen which is then copied to a spreadsheet for a few calculations.
I use Zacks.com for my stock screens. They have forward revenue estimates. Always verify the information because they don't show if it is calendar or fiscal year.
There are some wonky results in there. Like, if there is a negative operating margin, which makes the projected operating profit negative, and then the enterprise value is divided by the projected operating profit, that gives a negative number, which is fine. Then the sum of the revenue growth rate and the operating margin might also be negative, which is fine. But, then the Value Score is dividing a negative by a negative and giving a positive result, which is not good.
And there are other issues, which maybe you don't see as issues. JPM has a negative enterprise value, for example. I see Zacks does list it as negative. Yahoo and Finviz have it as n/a. StockAnalysis actually has it as a positive number owing to the way they accounted for cash. But, assuming a negative enterprise value is correct, it would still cause problems in the event that there are negative operating margins in that the EV/POP column would have a positive number even though operating margins were negative.
So, I tried fixing some of the formulas. You may or may not want to use them.
Column N =IF(K17="";"n/a";K17-I17-J17)
Column O =IF(OR(F17="";N17="n/a";N17>(F17+L17+M17));"n/a";F17+L17+M17-N17)
Column P =IF(OR(H17="";G17="");"n/a";(H17/G17)-1)
Column R =IF(OR(H17="";Q17="");"n/a";H17*(Q17/100))
Column S =IF(OR(O17="n/a";R17="n/a");"n/a";O17/R17)
Column T =IF(OR(P17="";P17="n/a";Q17="");"n/a";(P17*100)+Q17)
Column U =IF(OR(T17="n/a";S17="n/a");"n/a";IF(AND(T17<0;S17<0);(T17/S17)*(-1);T17/S17))
I did not test every scenario to make sure nothing was wrong or broken. But, that should fix some things.
It's an interesting valuation method. Very different from what I've been doing. I may keep an eye on it and play around with Zack's screener at some point.
Thanks. The Zacks screener doesn't really work with Financials, because of their large cash position which can turn Enterprise Value negative, and Biotechs, which most are losing money.
I just use it to get ideas or notice trends, then I do a deeper dive with the model I posted in the original thread. I have an even deeper model than that which accounts for depreciation and cap ex, since that is a major issue with the hyper scalers.
Since I work with tech companies in my day job and this is where most of the action is, I invest mostly in tech.
Why 2026 revenue forecast? It's already June. And do you enter that value manually? Because, unless I'm missing something, Yahoo, FinViz, and StockAnalysis have that revenue projection figure on the individual stock pages, but the only option on their screens is for ttm revenue.
Value investing... for the rest of the year........