The market is getting interesting again.

Not because everything is crashing.

Not because everything is cheap.

But because the market is starting to split.

On one side, we still have the same AI winners, mega-cap tech names, semiconductor stocks, and high-growth companies that have dominated investor attention for the last 18 months.

On the other side, we are starting to see early signs of rotation, broader participation, and a market that may finally be looking beyond the same handful of names.

That creates risk.

But it also creates opportunity.

And that is exactly why this month’s paid report is focused on one simple question:

Out of hundreds of Wall Street Buy-rated stocks, which ones actually look worth researching today?

Not the most hyped stocks.

Not the most popular stocks.

Not the names with the craziest price targets.

But the stocks where analyst upside, valuation, profitability, market cap, dividend profile, Smart Score, and risk-adjusted opportunity all line up better than the rest.

For this month’s screen, I reviewed 308 Buy-rated stocks.

From there, only 30 made the premium shortlist.

And today, paid subscribers get both:

1. The full written June 2026 High-Upside Dividend Report

2. The complete sortable Excel workbook behind the screen

Before we get into the list, though, we need to talk about the market backdrop because the macro setup matters a lot here.

This report takes a lot of time to build each month, and every share helps support the work.

The goal is simple: cut through the noise, screen the market properly, and focus on the companies that may actually deserve deeper research.

The Macro Setup: Fear Is Back, But The Market Is Not Broken

The CNN Fear & Greed Index is back in Fear territory.

That alone does not mean investors should panic.

In fact, fear can often be useful.

Markets tend to become most dangerous when investors assume nothing can go wrong. Right now, we are not there. The market has become more cautious, more selective, and more sensitive to bad news.

That is not necessarily a bearish setup.

It is a more disciplined setup.

And after the run we have seen in AI, semiconductors, mega-cap tech, and the S&P 500, that is probably healthy.

The S&P 500 is still up strongly year-to-date, but the tone underneath the surface has shifted.

The index has had a strong year.

But the gains have not been evenly distributed.

A huge portion of the market’s strength has come from the same dominant themes: AI infrastructure, semiconductor demand, hyperscaler capex, and mega-cap technology.

That has worked extremely well.

But it also means investors need to be careful about concentration risk.

When the same trade works for too long, everyone crowds into it.

And once expectations become too high, even great companies can become vulnerable to sharp pullbacks.

Last Week: Rotation Under The Surface

Last week’s market action was a good example of how strange this market has become.

It was not a simple “risk-on” or “risk-off” week.

Some mega-cap tech names were under pressure.

Apple, Microsoft, Amazon, Alphabet, Meta, and Oracle all had weakness in different parts of the week.

But at the same time, we saw strength in other areas of the market.

Financials were stronger.

Parts of healthcare were stronger.

Industrials were stronger.

Some consumer staples and defensive names started to catch a bid.

That matters.

Because the healthiest bull markets are not built on one sector forever.

At some point, leadership needs to broaden.

And this is the exact type of environment where a stock screen becomes more useful than simply buying whatever has already gone up the most.

Month-To-Date: The Market Is Starting To Broaden

The month-to-date heatmap tells a similar story.

Tech has become more mixed.

AI winners are no longer going straight up every day.

But beneath the surface, many non-tech areas have started to work.

That does not mean the AI trade is over.

It means the market may be moving from a narrow momentum phase into a more selective phase.

And that is where valuation starts to matter again.

When everything is going up, investors ignore price.

When the market becomes more selective, price starts to matter a lot more.

That is why I wanted this month’s screen to focus on more than just analyst upside.

A stock showing 70% upside is not automatically attractive.

Sometimes it is cheap for a reason.

Sometimes the analyst target is stale.

Sometimes the business has poor profitability.

Sometimes the market is already warning you that something is wrong.

So the goal of this report is not to blindly chase upside.

The goal is to find the highest-quality upside.

The AI Trade Is Cooling, Not Breaking

Semiconductor stocks have had a historic run.

Since 2025, the semiconductor index has massively outperformed the S&P 500.

That makes sense.

AI demand has exploded.

Data center spending has surged.

Nvidia has become one of the most important companies in the world.

Broadcom, AMD, Micron, TSMC, ASML, Applied Materials, Lam Research, and other semiconductor-related names have all benefited from the AI infrastructure cycle.

But even the best themes can move too far, too fast.

And when a trade becomes crowded, investors do not need bad fundamentals to sell.

Sometimes they just need a reason to take profits.

That appears to be what is happening now.

The AI story is still alive.

The long-term demand is still real.

But the market is beginning to ask a more important question:

How much of the future has already been priced in?

That is the key difference between a great business and a great investment.

A great business can still become a poor investment if expectations get too high.

AI Spending Is Still Massive

At the same time, it would be a mistake to pretend the AI investment cycle is suddenly over.

The expected capex from Amazon, Alphabet, Meta, Microsoft, and Oracle remains enormous.

AI infrastructure spending is expected to approach $1 trillion over the next 12 months.

That is a staggering number.

And it explains why investors continue to give premium valuations to the companies supplying the AI buildout.

But this is also where the debate gets more complicated.

On one hand, massive capex supports semiconductor demand, cloud infrastructure, power demand, data centers, software tools, and the broader AI ecosystem.

On the other hand, investors are starting to ask whether this spending will generate enough returns to justify the scale of investment.

That is why I do not think this market is simply “bullish” or “bearish”.

It is more nuanced than that.

The AI buildout is real.

But valuations are no longer universally attractive.

Some names still look compelling.

Others look priced for perfection.

And that is why selectivity matters.

The Average Stock May Have Catch-Up Potential

One of the most important charts right now is the gap between the market-cap weighted S&P 500 and the equal-weight S&P 500.

Since 2021, mega-cap stocks have dramatically outperformed the average stock.

That has created a very top-heavy market.

But it also means there may be catch-up potential outside the mega-cap leaders.

This is one of the reasons I like running screens like this.

The best opportunities are not always hiding in the most obvious places.

Sometimes they are in companies that have been ignored because they are not part of the current market obsession.

Sometimes they are in quality businesses trading at compressed valuations.

Sometimes they are in dividend-paying companies where investors are being paid to wait.

And sometimes they are in beaten-down sectors where expectations have become too low.

That does not mean every laggard is attractive.

Many laggards deserve to lag.

But when Wall Street is still positive, valuation has compressed, and the risk-adjusted setup improves, those names become worth reviewing.

SpaceX, IPO Fever, And Market Liquidity

The other major market event is the SpaceX IPO.

This is not just another IPO.

It is the largest IPO in history.

And that matters because IPOs are not just company events.

They are liquidity events.

When a huge new stock enters the market, investors need to fund it somehow.

Some capital comes from new inflows.

But some capital often comes from selling existing holdings.

That can create pressure elsewhere in the market, especially if the IPO is large enough to become a major talking point across institutional and retail investor circles.

The bigger issue is what SpaceX represents.

It is not just a space company.

It is a symbol of the current market environment:

• Huge private-market valuations

• Massive investor demand for growth

• AI and infrastructure excitement

• Founder-led premium

• Scarcity value

• FOMO

That can be powerful.

But it can also be dangerous.

History suggests that the largest IPOs often struggle after the initial excitement fades.

Big IPOs Usually Require Discipline

The average performance of the 30 largest U.S. IPOs relative to the S&P 500 is a useful reminder.

The excitement is usually highest at the start.

The returns are not always best at the start.

That does not mean SpaceX will fail as a stock.

It means investors should separate the company from the valuation.

A company can be extraordinary and still be a poor investment at the wrong price.

That idea applies far beyond IPOs.

It also applies to the stocks in today’s screen.

Just because Wall Street is bullish does not mean a stock is automatically attractive.

The screen is a starting point.

Not a final answer.

Inflation, Oil, And The Fed

The inflation picture is also important.

Headline inflation has moved higher, but much of the recent pressure appears to be energy-related.

Core inflation has been more contained.

That matters for the Fed.

If inflation is being driven mainly by oil and energy, the Fed may be less likely to respond aggressively than it would if core inflation were accelerating across the economy.

This is where geopolitics becomes important.

If tensions ease and energy prices fall, the inflation scare may calm down.

If energy prices spike again, the market may start worrying about higher-for-longer rates or even the possibility of renewed tightening.

That is why the Strait of Hormuz headlines matter.

Whether investors like the political noise or not, the market does care about energy flows.

Oil prices feed into inflation expectations.

Inflation expectations feed into bond yields.

Bond yields feed into equity valuations.

And equity valuations determine how much investors are willing to pay for future earnings.

That is why macro still matters.

Even if this month’s report is focused on individual stocks, the backdrop affects the multiple investors are willing to pay.

The Key Takeaway

The market is not broken.

But it is changing.

The leadership is broadening.

The AI trade is cooling after a huge run.

IPO activity is testing investor risk appetite.

Inflation remains tied to energy.

And investors are becoming more selective.

That is exactly the kind of market where stock picking becomes more important.

Not because every stock is cheap.

But because dispersion is increasing.

Some stocks are still expensive.

Some stocks are finally interesting.

And some stocks may offer attractive upside if the fundamentals, valuation, and analyst conviction line up.

That brings us to this month’s paid report.

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• The full June 2026 High-Upside Dividend Report

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• The 308-stock Buy-rated universe

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• The Top 5 highest-ranked names

• A dividend-aware subset

• A large-cap quality watchlist

• Risk buckets and manual-review flags

• My interpretation of which names look most worth researching first

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Good morning everyone,

This could be a huge week for the stock market.

Not because one single event will decide everything.

But because several major market forces are now colliding at the same time.

Inflation data is coming.

Interest rate expectations are shifting.

AI stocks just took a hit.

Fear has moved higher.

And the SpaceX IPO could become one of the biggest market events investors have ever seen.

That last point matters more than people realise.

Because SpaceX is not just another IPO.

It is a test of how much investors are still willing to pay for future growth, AI infrastructure, private-market hype, Elon Musk premium, and the idea that retail investors are finally getting access to something they were locked out of for years.

And the timing is fascinating.

Just as the market is starting to question stretched valuations, just as technology stocks are showing signs of stress, and just as interest rate expectations are moving higher, one of the most anticipated IPOs in history is being discussed at a valuation that could leave almost no room for error.

That combination matters.

Because Friday was not just another red day.

It was a warning shot.

Friday Was a Warning Shot

On Friday, the market looked ugly on the surface.

But the real story was even more interesting underneath.

Technology was hit hard.

Semiconductors were crushed.

Nvidia fell sharply.

Broadcom dropped even more.

AMD, Micron, Intel and several other chip-related names were deep in the red.

The Nasdaq was under real pressure.

But this was not a normal “everything is down” type of sell-off.

One of the most interesting charts from Friday showed that more than half of S&P 500 stocks were actually advancing, even though the index itself was down more than 2%.

That is unusual.

And it tells us something important.

This was not necessarily a broad market collapse.

It looked more like a concentrated unwind in the stocks that had been carrying the market higher.

In other words, the market was not selling everything.

It was selling the crowded winners.

That is a very different message.

The Market Is Starting to Question the AI Trade

For most of the past few years, the easiest trade in the market has been simple:

Buy the AI winners.

That trade has worked incredibly well.

AI-related companies have added trillions of dollars in market value since the launch of ChatGPT.

The market has rewarded companies connected to chips, cloud infrastructure, data centres, large language models, and anything tied to the next phase of artificial intelligence.

And to be clear, I am not dismissing AI.

The opportunity is real.

The investment cycle is real.

The demand for compute is real.

But the stock market does not just care whether a theme is real.

It cares how much investors are paying for that theme.

And that is where things become more complicated.

If a small group of AI-related companies has driven most of the market’s gains, then the market becomes much more sensitive to any change in expectations.

If interest rates rise, valuations matter more.

If earnings disappoint, expectations matter more.

If investors start rotating away from crowded trades, positioning matters more.

That is why Friday was important.

It showed that investors may be starting to question whether some parts of the AI trade have become too crowded, too expensive, or too dependent on perfect execution.

Fear Is Rising Again

The Fear & Greed Index has moved back into fear.

That does not mean the market has to crash.

It does not mean investors should panic.

But it does show that sentiment has changed quickly.

One week ago, the market was still in greed.

One month ago, it was deeper in greed.

Now, after one sharp move lower, investors are suddenly more cautious.

That is how quickly sentiment can shift when valuations are high.

And this is why I always come back to valuation discipline.

When investors are greedy, they focus on upside.

When investors are fearful, they suddenly remember risk.

The business may not have changed in 24 hours.

But the price investors are willing to pay for that business can change very quickly.

Good News Is Becoming Bad News Again

The other major issue is interest rates.

The market has spent much of the year hoping for lower rates.

But the latest economic data has made that story more difficult.

The labour market has been stronger than expected.

Hiring has improved.

The economy looks more resilient.

Normally, that should be good news.

And for the real economy, it probably is.

A stronger labour market supports consumer spending, corporate earnings, and overall growth.

But for the stock market, there is a catch.

If the economy is stronger than expected, the Federal Reserve has less pressure to cut interest rates.

And if inflation remains sticky at the same time, the market may start worrying about the opposite problem.

What if rates stay higher for longer?

What if the next move is not a cut?

What if the market has been too optimistic?

That is why this week matters so much.

Inflation data is coming.

And if inflation comes in hotter than expected, the market may have to reprice again.

Higher Rates Change the Valuation Conversation

This is the part investors cannot ignore.

Higher interest rates do not affect all stocks equally.

When rates are low, investors are usually more willing to pay higher prices for future growth.

That helps technology stocks.

It helps companies where a lot of the expected value sits far into the future.

It helps long-duration growth stories.

But when rates rise, or when markets price in higher-for-longer rates, those same valuations become harder to justify.

That does not mean great companies suddenly become bad companies.

It means the price matters more.

A great company can still be a bad investment if the starting valuation is too high.

And that brings us to one of the biggest stories in the market right now.

The SpaceX IPO Is Arriving at a Fascinating Time

SpaceX may be one of the most impressive private companies in the world.

The company has transformed the launch industry.

Starlink has built a global satellite internet business.

The long-term potential is enormous.

And if SpaceX does come public, it will likely become one of the most talked-about listings in market history.

But here is the problem.

It may be arriving at exactly the moment investors are starting to care about valuation again.

SpaceX is reportedly targeting a valuation around $1.75 trillion.

That is an extraordinary number.

At that level, investors are not just paying for a great rocket business.

They are not just paying for Starlink.

They are paying for a future where almost everything goes right.

Reusable rockets.

Satellite broadband.

Space-based infrastructure.

Potential AI compute.

Massive future cash flows.

And entirely new markets that do not yet exist at scale.

Could some of this happen?

Absolutely.

But the question investors need to ask is not whether SpaceX is an incredible company.

The better question is:

How much of that incredible future is already priced in?

The Valuation Gap Is the Real Story

Morningstar has reportedly valued SpaceX at around $780 billion.

That is still a huge valuation.

But it is far below the valuation being discussed for the IPO.

This creates the central issue for investors.

SpaceX may be an amazing business.

But if the IPO valuation is more than double what a fundamental analyst believes the business is worth today, then the margin of safety may be very thin.

And that matters.

Because public market investors are not buying the company in its early days.

They are not buying when the valuation was $10 billion.

They are not buying when the valuation was $100 billion.

They are potentially being invited in after the story has already become enormous.

That does not automatically make it a bad investment.

But it does mean investors need to be honest about where they are entering the story.

Are retail investors getting early access to a once-in-a-generation business?

Or are they providing liquidity at a very high valuation?

That is the question.

Retail Investors Are Being Invited In

One of the most interesting parts of the SpaceX IPO is the potential retail allocation.

Usually, high-profile IPOs are dominated by institutions.

Retail investors often get access later, after the big money has already had the better entry point.

But in this case, retail investors may receive a much larger allocation than normal.

On the surface, that sounds exciting.

It sounds like access.

It sounds like democratisation.

And maybe that is part of it.

But investors should also be careful.

When retail investors are invited into a huge IPO at a very high valuation, the question is not just:

Can I get shares?

The better question is:

Should I want shares at this price?

Because IPOs are often emotional.

They are marketed with excitement.

They are surrounded by hype.

They create fear of missing out.

But long-term returns are usually not driven by hype.

They are driven by earnings, cash flow, growth, and the price paid.

Being early is not always the same as being right.

Especially if the valuation already assumes an extraordinary future.

Index Buying Could Create Forced Demand

There is also another important issue.

Index inclusion.

If SpaceX becomes a public company and is eventually added to major indexes, passive funds may be required to buy it.

That can create automatic demand.

But automatic demand is not the same as valuation-sensitive demand.

A passive fund does not buy because a stock is cheap.

It buys because the index tells it to.

That is why investors should be careful when people point to future index demand as a reason to buy.

Yes, it can support the stock in the short term.

Yes, it can create powerful flows.

Yes, it can make the IPO even more exciting.

But forced buying does not make a stock undervalued.

It just means more money may be required to buy the stock, regardless of price.

And in a market where passive capital is so large, that matters.

This Is the Bigger Lesson for Investors

The SpaceX IPO is not just a SpaceX story.

It is a market story.

It tells us where we are in the cycle.

Investors are still willing to pay enormous valuations for exciting growth stories.

Retail investors are still eager to access anything connected to Elon Musk, AI, space, and the next big technology platform.

Wall Street is still very good at turning a great story into a major market event.

But Friday’s sell-off reminds us that valuation still matters.

The market may love a story when everything is going up.

But when rates move higher, inflation becomes sticky, or investors start reducing risk, the market becomes much less forgiving.

That is why this week is so important.

It is not just about whether inflation comes in hot or cold.

It is not just about whether the Fed sounds hawkish or dovish.

It is not just about whether AI stocks bounce or keep falling.

It is about whether investors are still willing to pay premium valuations in a market where the macro backdrop is becoming more complicated.

Market Leadership May Be Changing

One of the most interesting developments is the possibility that market leadership is starting to broaden.

For a long time, the market has been dominated by mega-cap technology and AI-related stocks.

But recently, there have been signs that other areas of the market are starting to participate.

That could be healthy.

A market led by only a handful of stocks can work for a while.

But it also creates concentration risk.

If those leaders start to weaken, the index can fall even if many individual stocks are holding up.

That is exactly what we saw on Friday.

So the question now becomes:

Is this just a short-term pullback in tech?

Or is it the beginning of a broader rotation?

I do not know the answer yet.

But I think investors should be paying close attention.

Because if leadership broadens, there may be opportunities outside the most crowded AI names.

Dividend stocks.

Defensive compounders.

Financials.

Healthcare.

Consumer staples.

Industrial businesses.

And high-quality companies that have been ignored while investors chased the hottest technology names.

This Week Could Create Opportunities

I am not treating this week as a reason to panic.

I am treating it as a reason to prepare.

The real opportunity this week may not come from predicting the inflation number perfectly.

It may not come from guessing exactly what the Fed will do.

And it may not come from chasing the SpaceX IPO.

The real opportunity may come from watching which high-quality stocks get dragged down unfairly.

That is what I am focused on.

If a weak business falls, that is not automatically an opportunity.

But if a high-quality company with strong cash flows, a durable competitive advantage, and a reasonable valuation falls simply because the market is under pressure, that is where things can get interesting.

Volatility only helps you if you already know what you want to own.

That is why I prefer to build watchlists before the panic.

Not during it.

What I Am Watching Now

This week, I am watching four things closely.

First, inflation.

If inflation comes in hotter than expected, higher-for-longer rate fears could return very quickly.

Second, bond yields.

If yields keep moving higher, expensive growth stocks may remain under pressure.

Third, AI leadership.

If the AI winners keep selling off, the market may start questioning whether valuations have moved too far ahead of fundamentals.

Fourth, market breadth.

If more stocks begin participating while mega-cap tech cools off, that could be a healthy sign.

But if the weakness spreads from tech into everything else, then the market may have a bigger problem.

Final Thoughts

This is a huge week for the stock market.

Inflation is back in focus.

Interest rates are back in focus.

AI valuations are back in focus.

And the SpaceX IPO is arriving as one of the biggest tests of investor appetite for extreme growth stories.

The business may be incredible.

The story may be exciting.

The long-term potential may be huge.

But the price still matters.

That is the lesson investors cannot forget.

A great company can still be a poor investment if the valuation already assumes perfection.

And in a market where fear is rising, rates are shifting, and crowded technology trades are under pressure, valuation discipline becomes more important, not less.

My plan is simple.

I am staying patient.

I am staying selective.

And if volatility creates opportunities in high-quality businesses, I want to be ready.

Because the best opportunities usually appear when the market gets emotional.

And this week, there is a real chance the market gives investors a lot to think about.

For the free section, I wanted to focus on the bigger market setup: inflation, rates, AI valuations, and why the SpaceX IPO could become a major test of investor appetite.

For paid subscribers, I want to go one step further and look at the actual stocks I would rather watch than chase the SpaceX IPO.

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The market has a strange way of doing this.

For months, investors can ignore valuation.

Then suddenly, everything changes.

A stock that once looked untouchable starts to look normal.

A premium multiple becomes a liability.

A short-term earnings concern becomes a reason to question the entire long-term thesis.

A sector that was once loved becomes too uncomfortable to own.

That is usually where the best screens start to get interesting.

Not because every falling stock is cheap.

Not because every lower valuation is an opportunity.

But because once the market starts repricing quality, the gap between sentiment and fundamentals can open very quickly.

For June, I reviewed 177 undervalued candidates.

Unlike a broad all-market screen, this month’s file was already focused on companies flagged as potentially undervalued.

So the question this month was not simply:

“What is cheap?”

It was:

“Which undervalued stocks still have enough quality, balance sheet strength, dividend support and upside to deserve a higher ranking?”

That is a very different filter.

Because when everything in the screen looks optically cheap, price alone is not enough.

This month, I ranked the full list using the same blended allocation framework:

• 40% valuation

• 35% quality

• 15% risk

• 10% income

The goal is not to find the stock with the highest upside on paper.

The goal is to find the best balance between valuation reset, business quality, downside protection and capital allocation potential.

And the June results were very interesting.

Why June’s Screen Is Different

May was about earnings reactions, sector fatigue and stocks being punished too aggressively after a reset.

June is different.

This month’s screen feels much more like a quality repricing.

The market is still rewarding momentum in certain areas.

But underneath the surface, a lot of high-quality businesses have been pushed into much more reasonable valuation ranges.

Some are obvious.

Some are boring.

Some still have uncomfortable narratives.

But the key pattern was clear:

The market is not just punishing weak businesses.

It is also repricing quality businesses where expectations were once too high.

That matters.

Because when a low-quality business gets cheaper, it can stay cheap.

But when a durable business gets repriced too aggressively, the long-term risk/reward can improve quickly.

What Stood Out This Month

The biggest opportunities in the June screen came from four areas.

1. Quality technology is still being reset

Technology appeared heavily again.

But this was not a pure AI momentum screen.

The names that ranked well were mostly profitable, established businesses where the market has compressed the multiple.

That is an important distinction.

The screen was not rewarding the most exciting story.

It was rewarding the businesses where:

• The valuation has reset

• Cash generation remains attractive

• Balance sheets are manageable

• Dividend safety still screens well

• The old premium multiple has disappeared

That is the kind of setup I want to pay attention to.

Not because every technology stock is cheap.

But because some quality businesses are being valued much more reasonably than they were during peak sentiment.

2. Healthcare remains deeply out of favour

Healthcare continues to screen well.

This is a sector where the market has become much more cautious.

Investors are worried about:

• Competition

• Pricing pressure

• Regulatory scrutiny

• Growth durability

• Whether previous valuation premiums were too optimistic

Those concerns are real.

But valuation now looks very different.

Several healthcare names in the June model show large fair value gaps, strong ROIC, and meaningful dividend growth support.

That does not make them risk-free.

But it does suggest that the market may now be pricing a much more pessimistic future than the long-term fundamentals require.

3. Boring cash-generative businesses are coming back into focus

One of the most important lessons from this screen is that not every opportunity needs to be dramatic.

Some of the best setups came from companies that are easy to ignore.

These are often businesses that are:

• Cash-generative

• Profitable

• Dividend-supported

• Less dependent on hype

• Trading below their normal valuation ranges

This is often where screens become useful.

The market tends to obsess over the loudest narratives.

A good screen can surface the quiet names where valuation has improved without the business necessarily being broken.

4. Highest upside was not always the highest ranking

This is important.

The ranking is not purely based on upside.

If it were, the list would simply reward the largest fair value gaps.

But that is not how I want to allocate capital.

The allocation score is designed to reward more than just upside.

It also considers business quality, dividend safety, ROIC, leverage, income support and downside risk.

That means a business with slightly lower upside can outrank a business with a larger fair value gap if the overall risk/reward is stronger.

The point of the framework is not to chase the biggest number.

It is to ask:

“Where does the risk/reward look strongest after adjusting for quality?”

The Key Question

This month’s spreadsheet is not asking:

“What is down the most?”

It is asking:

“Which undervalued stocks still have the quality to deserve capital?”

That matters.

Because a stock being below fair value is only one part of the decision.

A company also needs:

• Durable earnings power

• Strong or improving free cash flow

• A manageable balance sheet

• Acceptable payout risk

• Reasonable dividend safety

• A valuation that compensates investors for the uncertainty

That is where the June screen becomes useful.

The full list includes many stocks that look cheap.

But the top 10 are the names where the model found the strongest combination of valuation, quality, risk and income.

For Paid Subscribers

Below, I reveal the full June spreadsheet, including the ranked top 10 list, fair value estimates, expected upside, quality scores, risk scores, income scores, conviction tiers and the full allocation framework.

The goal is not to tell you to buy everything.

It is to show where the strongest risk/reward now appears after filtering for valuation, quality, income and downside risk.

If you are already a paid subscriber, the full report and spreadsheet are available below.

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Visa and Mastercard have been two of the best businesses on Earth for decades.

They are not flashy AI stocks.
They do not dominate headlines like Nvidia, Microsoft or Tesla.
And they are rarely the first names people rush to buy during a market rally.

But for long-term investors, they have been almost perfect compounding machines.

Huge margins.
Strong pricing power.
Massive global networks.
Light capital requirements.
High returns on capital.
Consistent buybacks.
And exposure to the long-term shift away from cash.

That is why I have owned these businesses for a long time.

But recently, something has changed.

The market has started to question whether Visa and Mastercard’s best days are behind them.

Europe wants alternatives.

The UK wants alternatives.

Merchants are still angry about swipe fees.
Politicians are once again targeting card economics.

Stablecoins are being called a serious threat.
And reports suggest companies like Amazon and Walmart may be exploring their own payment coins.

So the obvious question is this:

Are Visa and Mastercard finally losing their moat?

Or is this simply another moment where investors panic, the stocks sell off, and two elite businesses keep quietly printing cash?

My view is simple.

The risks are real.
But I do not think the business models are broken.

In fact, I think this could be one of those rare moments where the market gives long-term investors a better price on two of the highest-quality companies in the world.

The Market Is Suddenly Worried

What makes this setup so interesting is that the broader market has been strong.

AI stocks have been running.
The S&P 500 has continued pushing near record highs.
Several mega-cap names still trade close to their peaks.

But Visa and Mastercard have moved in the opposite direction.

Visa is down around 12% from its 52-week high.
Mastercard is down around 18% from its 52-week high.

That is not a collapse. But for businesses of this quality, that kind of move matters.

These are not random struggling companies.
These are elite global payment networks that have historically traded at premium valuations because the market understands how powerful their economics are.

So when the market starts discounting them, I pay attention.

The big concern is that Visa and Mastercard are now being attacked from almost every angle at the same time.

Regulators are questioning card fees.
Merchants want more control.
Governments want domestic payment alternatives.
Stablecoins are being promoted as faster and cheaper rails.
And large retailers may want to reduce their dependence on traditional card networks.

That sounds scary.

But scary headlines and broken fundamentals are not the same thing.

The Bear Case Is Not Stupid

Before making the bullish case, it is worth being honest about the risks.

The bear case against Visa and Mastercard has become more credible than it was a few years ago.

This is no longer just the usual argument of:

“The stocks are expensive.”

That argument has existed for years.

The new argument is more serious.

It says Visa and Mastercard could face structural pressure from four directions:

1. Regulation

2. Merchant pushback

3. Stablecoins

4. Alternative payment rails

The political risk is especially important.

For years, Visa and Mastercard benefited from being the default global payment networks. But governments are now asking whether countries should rely so heavily on American card networks.

That matters because payments are no longer just about convenience.

They are about control.
They are about sovereignty.
They are about who owns the rails of money movement.

If Europe, the UK or other regions decide they want more domestic alternatives, Visa and Mastercard may face more pressure over time.

Then there is the swipe-fee issue.

Merchants have long complained about the cost of accepting card payments. Every time a consumer taps, swipes or inserts a card, merchants pay fees into the card ecosystem.

Those fees help fund the system.
They support rewards.
They incentivise banks.
They support fraud protection, processing, authorisation and network access.

But from the merchant perspective, they are a cost.

The recent legal settlement around swipe fees could allow merchants to be more selective over which cards they accept. That matters because premium rewards cards tend to carry higher costs.

If merchants can push back against higher-interchange cards, the economics of certain reward-heavy card products could come under pressure.

This does not destroy Visa or Mastercard overnight.

But it is a genuine risk.

And then comes the biggest fear of all.

Stablecoins.

Are Stablecoins the Beginning of the End?

Stablecoins have become the new scary word for Visa and Mastercard investors.

The bearish argument is simple:

If consumers and businesses can move digital dollars instantly, 24/7, across blockchain rails, why would they keep paying traditional card network fees?

And if companies like Amazon or Walmart launch their own payment coins, could they pull transaction volume away from Visa and Mastercard?

On the surface, that sounds dangerous.

But I think investors need to separate two very different use cases.

Stablecoins may be extremely useful for:

• cross-border payments

• remittances

• B2B settlement

• treasury movement

• crypto-native ecosystems

• instant dollar transfer outside traditional banking hours

But that is not the same as replacing mainstream consumer card payments at scale.

Consumer payments are incredibly difficult.

It is not enough to create a faster rail.

You need trust.
You need fraud protection.
You need dispute resolution.
You need identity.
You need compliance.
You need bank partnerships.
You need merchant acceptance.
You need consumer habit.
You need global reliability.

And this is where Visa and Mastercard are still incredibly powerful.

The biggest advantage of Visa and Mastercard is not just that they process transactions.

It is that they are accepted almost everywhere.

Visa has access to roughly 150 million merchant locations. That kind of acceptance network is extremely difficult to replicate.

Stablecoins may be faster money.

But faster money still needs somewhere to go.

And this is where the bull case gets interesting.

Stablecoins may not kill Visa and Mastercard.

They may end up using them.

Visa and Mastercard Are Not Ignoring Stablecoins

This is the part of the story I think the market may be missing.

Visa and Mastercard are not sitting still and pretending stablecoins do not exist.

They are already trying to connect themselves to the new rails.

Mastercard has been expanding into blockchain and stablecoin infrastructure, including the reported BVNK acquisition, which is designed to connect on-chain payments with traditional fiat rails.

Visa has also been building stablecoin settlement capabilities for years and has already talked about real volume moving across blockchain-based settlement infrastructure.

That changes the story.

The simple bearish view is:

Stablecoins replace Visa and Mastercard.

But the more nuanced view is:

Stablecoins still need distribution, acceptance, compliance, security and merchant connectivity — and Visa and Mastercard can provide that infrastructure.

That does not mean there is no risk.

There is risk.

But I do not think this is a clean “old rails die, new rails win” situation.

Payments rarely work that way.

The more likely outcome is that new payment technologies get absorbed into the existing financial ecosystem.

That has happened before.

Investors once worried that PayPal would disrupt Visa and Mastercard.
Then they worried about Apple Pay.
Then they worried about buy now, pay later.
Now they are worried about stablecoins.

But historically, Visa and Mastercard have not been easy to replace.

They have adapted.

And so far, the numbers still suggest these businesses are growing, not breaking.

The Fundamentals Are Still Excellent

This is where the current market narrative starts to look disconnected from reality.

If Visa and Mastercard were truly being disrupted today, I would expect to see weakness in the numbers.

But that is not what we are seeing.

Visa’s latest quarter was strong.

Revenue came in at around $11.2 billion, up 17% year over year.
Non-GAAP EPS came in at $3.31, up 20% year over year.
Payments volume grew 9%.
Cross-border volume, excluding intra-Europe, grew 11%.
Processed transactions grew 9%.

That is not what a broken payment network looks like.

Even more importantly, Visa’s payment volume growth actually accelerated from Q1 to Q2.

US credit improved.
US debit improved.
International payment volume remained strong.

And Visa now has around 5.1 billion cards, up approximately 6% year over year.

So despite all the disruption fears, the network is still expanding.

Mastercard was also strong.

Net revenue grew 16%.
Adjusted operating income grew 19%.
Adjusted diluted EPS grew 23%.
Adjusted operating margin was above 60%.

Again, these are not normal numbers.

Most companies would dream of this financial profile.

But the most interesting part of Mastercard’s results was its Value-Added Services and Solutions segment, which grew 22%.

That matters because Mastercard is no longer just a card network.

It is building a wider ecosystem around:

• fraud prevention

• data analytics

• cyber security

• identity

• open banking

• consulting

• and now stablecoin infrastructure

That makes the business model more diversified than many investors realise.

These Are Still Global Toll Roads

The reason I have always liked Visa and Mastercard is because they behave like toll roads on global commerce.

They do not lend money to consumers.
They do not take the same credit risk as banks.
They do not need to own huge physical infrastructure.
They simply sit in the middle of a global transaction network and take a small fee as money moves.

That is a beautiful business model.

Mastercard converts around $8.4 billion of revenue into roughly $4.9 billion of operating profit.

Visa converts around $11.2 billion of revenue into roughly $7.2 billion of operating profit.

These are extremely high-margin businesses.

Visa operates around the high-60% operating margin level.
Mastercard operates around the high-50s to 60% range.

That is why the stocks rarely look cheap.

Investors are not just paying for growth.
They are paying for growth with exceptional profitability.

And the long-term transaction data still looks healthy.

From 2012 to 2025, Mastercard’s annual transaction volume increased by around 191%.
Visa’s increased by around 165%.

The bear case requires a meaningful slowdown in the core payment network.

So far, the long-term trend is still up and to the right.

The Real Question

The entire debate comes down to one question:

Can the world build alternative payment rails fast enough to weaken Visa and Mastercard?

Or will Visa and Mastercard simply connect themselves to the new rails and continue taking a fee?

That second outcome is the one I think the market may be underestimating.

Because Visa and Mastercard have a long history of adapting to threats.

They did not get destroyed by PayPal.
They did not get destroyed by Apple Pay.
They did not get destroyed by fintech wallets.
They did not get destroyed by buy now, pay later.

In many cases, these “disruptors” actually increased digital payment volume and strengthened the overall ecosystem.

That is the key point.

New payment methods do not automatically hurt Visa and Mastercard.

Sometimes they expand the market.

The world is still moving away from cash.
More commerce is becoming digital.
More transactions are happening online.
More money is moving across borders.
More businesses need fraud prevention, security, identity and compliance.

That is still a very attractive backdrop.

Institutional Investors Are Not Running Away

Another interesting part of the current setup is institutional ownership.

Visa has more than 82% institutional ownership.

Mastercard has around 97% institutional ownership.

That does not mean the stocks cannot fall.
It does not mean institutions are always right.
And it does not mean investors should blindly copy them.

But it does suggest these are not abandoned, dying businesses.

The super-investor data is also interesting.

Around 28 super investors hold Visa.

Around 21 super investors hold Mastercard.

Over the last two quarters, 22 super investors added to Visa, while 10 added to Mastercard.

Again, this does not prove Visa is better.

But it does show that sophisticated investors are still interested in these names despite the headlines.

It is also worth noting that Berkshire Hathaway has reportedly sold out of both Visa and Mastercard.

That is worth paying attention to.

But I would not overreact to it either.

Berkshire has been trimming and reshaping parts of its portfolio for a while. A sale by Berkshire does not automatically mean the long-term thesis is broken.

What matters more to me is whether the businesses themselves are weakening.

And right now, I do not see that in the numbers.

The Valuation Is Finally Interesting

Visa and Mastercard are rarely “cheap” in the traditional sense.

These are premium businesses.
Premium businesses usually trade at premium valuations.

So the goal is not necessarily to buy them at deep value multiples.

The goal is to buy them when the market is temporarily worried enough to offer a reasonable entry point.

And today, I think we are closer to that kind of setup.

Visa trades at a forward P/E of around 24x, compared to its 5-year average of roughly 27x.

So Visa is not screaming cheap.

But for Visa, this is clearly cheaper than normal.

Mastercard looks even more interesting from a relative valuation perspective.

It trades at a forward P/E of around 24x, compared to its 5-year average of roughly 32x.

That means Mastercard is trading at a much bigger discount to its own history.

This is where the comparison gets interesting.

Visa looks safer.
Mastercard looks more discounted.

Visa has the cleaner balance sheet.
Mastercard has the stronger growth profile.

Visa has slightly better defensive characteristics.
Mastercard may have more upside if sentiment recovers.

That is why I like both.

But if I had to pick one today, the answer becomes more nuanced.

Paid Subscribers: My Fair Value Estimates, Buy Prices and Final Ranking

The rest of this article includes my updated valuation work, including:

• my fair value estimate for Visa

• my fair value estimate for Mastercard

• the implied margin of safety for both stocks

• the reverse DCF expectations

• which one I would buy first today

• and how I would rank them inside a long-term portfolio

Paid members also get access to the full research archive, including last month’s May Best Stocks to Buy edition. The full June edition goes live on Monday morning.

👉 Read last month’s May Best Stocks to Buy edition here:

That spreadsheet will screen the market for the best mix of quality, valuation, risk and income and highlight the stocks that currently look most attractive based on my models.

This Visa and Mastercard setup is exactly the type of situation I like to look for:

elite businesses, scary headlines, strong fundamentals, and a market that may be overreacting.

Read more

The market has been strong again.

After a difficult stretch earlier in the year, the S&P 500 has continued to recover, and the recent winning streak has been hard to ignore.

The interesting part is that this rally has happened even while bond yields have moved higher.

That matters.

Higher yields do not automatically kill a bull market, but they do raise the bar for equities. When investors can earn a reasonable return from cash or short-term bonds, they become less willing to pay any price for future earnings.

That is why valuation discipline becomes more important after a rally, not less important.

The 10-year Treasury yield is once again testing the upper end of its recent range. That does not mean stocks have to fall tomorrow, but it does mean investors should be more selective.

This is the environment where I do not want to blindly chase the index.

At the same time, I also do not want to sit completely in cash just because the market has already moved higher.

I prefer a third option:

update the numbers.

Because even when the broad market looks expensive, individual stocks can still be mispriced.

That is especially true when leadership is narrow, sentiment has improved, and investors are paying very different prices for different parts of the market.

The valuation gap is important.

Large-cap indexes are not exactly cheap. But beneath the surface, there are still individual companies trading at more reasonable valuations, especially outside the most crowded parts of the market.

That is what I wanted to test this week.

So I went back through my valuation models and screened for dividend-paying companies where the market price still sits below my estimate of fair value.

I was not just looking for the highest theoretical upside.

A cheap-looking stock is not automatically attractive.

I wanted companies where the valuation, dividend profile, cash flow picture, and business quality still made sense together.

For this article, I focused on companies where my model showed:

• a clear discount to fair value

• dividend support through either dividend history or dividend modelling

• a business that can plausibly recover without needing a perfect macro backdrop

• enough upside to justify deeper research

In total, five dividend-paying stocks passed the screen.

Paid subscribers will get the full list, fair value estimates, buy zones, and my ranking below. But first, I want to walk through one example for free readers.

The results were interesting.

One stock had the highest upside in the model, but also the most execution risk.

Two looked like stronger quality/value setups.

One was more of a cyclical turnaround idea.

And one was a lower-upside dividend compounder that I think is a useful free example.

That stock is AbbVie.

I’m choosing AbbVie as the free example because it is not the most explosive name in the screen. It is not the highest-upside stock, and it is not the cheapest.

But it is a good example of how I think about valuation.

The remaining four stocks, including the highest-upside name in the model, are included for paid subscribers below.

AbbVie: A Lower-Upside, Higher-Confidence Dividend Setup

AbbVie is not the cheapest stock in this screen.

It is also not the highest-upside name.

But that is exactly why I think it is useful to discuss before the paywall.

My valuation model estimates AbbVie’s intrinsic value at around $251.59, compared with a recent market price of around $215.

That suggests a margin of safety of roughly 14.5%.

For a deep-value stock, that would not be enough.

But AbbVie is not really a deep-value situation.

This is more of a dividend compounder trading at a reasonable discount to my estimate of fair value.

The valuation is also supported by multiple approaches.

My discounted cash flow model gives a valuation of around $247.07.

The dividend discount model gives a value of around $242.20.

The multiples valuation comes in at around $251.19, while Graham’s valuation is higher at around $265.88.

The exact number is not the point.

The important part is that several valuation methods are pointing in a similar direction.

That does not make AbbVie an automatic buy, but it does make the setup more interesting.

At a recent price of around $215, AbbVie trades on a forward P/E of roughly 15x, with a forward dividend yield of around 3.2%.

That is not screaming bargain territory.

But it also does not look expensive for a profitable, large-cap pharmaceutical company with a meaningful dividend.

The key debate with AbbVie is still the same one investors have been wrestling with for years:

Can the company move beyond Humira?

Humira was a monster drug, and the loss of exclusivity created a real earnings challenge.

That concern was valid.

But the market also knew this was coming. The question today is not whether Humira declines. It already has.

The question is whether AbbVie’s newer portfolio, pipeline, and cash flow can support the next phase of growth.

That is where the setup becomes more interesting.

The headline growth grade may look weak, but the underlying metrics are more mixed.

Revenue growth remains positive, forward revenue growth is still respectable, EBITDA growth is strong, and forward EPS growth expectations are not bad.

That tells me the market may still be too focused on the old Humira story, while the actual business is moving through the transition.

Of course, this is not risk-free.

Pharma stocks always come with patent risk, pipeline risk, regulatory risk, and drug pricing pressure.

AbbVie also carries leverage, which is something I continue to watch closely.

Net debt to EBITDA has improved versus prior periods, but it is still not as low as I would ideally like.

That does not break the thesis.

But it does mean AbbVie needs to keep generating strong cash flow, supporting the dividend, and managing capital allocation carefully.

For me, the investment case is fairly simple.

AbbVie does not need to be a perfect company to be interesting.

It just needs to keep proving that the post-Humira business can grow, the dividend remains supported, and the valuation remains reasonable.

In my DCF model, I used an 8% discount rate, a 3% perpetual growth rate, and a long-term free cash flow growth assumption of around 8%.

Based on those assumptions, the DCF gives me an intrinsic value estimate of roughly $247 per share.

That is above the current market price, but not by enough for me to call this a screaming buy.

And that is exactly the point.

AbbVie is not the most exciting stock in the screen.

It is the balanced example.

It offers a dividend yield of around 3%, reasonable valuation support, and a business that may still be underestimated if the post-Humira portfolio continues to deliver.

But the margin of safety is not huge.

So I would still be disciplined on price.

For me, AbbVie is the kind of stock that could make sense for dividend investors who want quality and income, but do not want to rely on a full turnaround story.

The bigger question is whether any of the other four stocks offer a better risk/reward today.

And that is where the paid section begins.

For Paid Subscribers

AbbVie is the lower-upside, higher-confidence example from the screen.

But it was not the most mispriced stock my model found.

Below, I’ve included the full five-stock screen, including my fair value estimates, model upside, key risks, buy zones, and final ranking.

One of the remaining names is down more than 50% this year and still shows roughly 64% upside in my model.

Another has a pristine balance sheet, a dividend yield far above its historical average, and what I think may be the most attractive overall risk/reward setup in the screen.

But the raw upside number is not enough.

The real question is which stock has the best blend of valuation, dividend support, business quality, balance sheet strength, and realistic upside.

That is what I’ll break down below.

Read more

Sell in May? I’m Looking For High-Upside Stocks Instead

Every year around this time, investors hear the same phrase.

“Sell in May and go away.”

And to be fair, there is some historical evidence behind it.

The May to October period has historically delivered lower average returns than the November to April period. Since 1980, the S&P 500 total return index has produced an average return of around 8.4% between November and April, compared with around 4.6% between May and October.

But this is where investors need to be careful.

Lower average returns do not automatically mean investors should sell everything, move to cash, and try to time their way back in later.

Because that requires getting two very difficult decisions right.

First, when to sell.

Second, when to buy back in.

And history has shown repeatedly that most investors are not very good at timing either side.

So while I do think the market has had a strong move and could easily pause, consolidate, or become more volatile through the summer, I do not think “sell everything and go away” is a serious investment strategy.

Instead, I think the better approach is this:

Stay invested. Stay selective. And build a watchlist before volatility returns.

That is exactly what this month’s paid subscriber spreadsheet is designed to do.

The Market Is Strong - But Not Cheap Everywhere

One reason the “sell in May” discussion is getting louder is because the market has already had a very strong year.

The S&P 500 is up more than 8% year-to-date, and after the correction earlier this year, the rebound has been sharp.

This creates a difficult environment for investors.

On one hand, the index is back near highs.

On the other hand, the underlying market is not as simple as “everything is expensive.”

Some areas have run very hard. Some areas still look stretched. But other areas remain unloved, ignored, or priced for weaker outcomes than may actually happen.

That is why I do not think the correct question is simply:

“Should I sell?”

A better question is:

“Where is the market still mispricing future upside?”

That is the question I wanted to answer with this month’s high-upside screen.

Earnings Are Still Supporting The Market

The main reason I am not aggressively bearish here is that the move higher has not happened in a complete vacuum.

Earnings expectations have also been moving higher.

The S&P 500 has rallied alongside improving 2026 earnings forecasts, which suggests part of the market move is being supported by fundamentals rather than just sentiment or multiple expansion.

This matters.

If the market was rising while earnings expectations were collapsing, that would be a much more worrying setup.

But right now, the earnings picture remains relatively resilient.

The labour market has held up better than many expected. Consumers are still spending. Corporate earnings are still coming through. And in certain areas, especially technology, AI, semiconductors, energy, and materials, earnings expectations have actually improved.

That does not mean there are no risks.

It simply means the bearish case is not as obvious as saying:

“The market is near highs, therefore it must crash.”

Markets can be expensive and still move higher.

Markets can look stretched and still consolidate sideways.

And markets can be strong at the index level while still offering opportunities underneath the surface.

Oil Is A Risk - But The Market Is Not Pricing Permanent Panic

One of the biggest macro risks right now is oil.

Higher oil prices can put pressure on consumers, keep inflation stickier for longer, and make life harder for central banks.

But the important point is that the oil futures curve is not currently pricing oil staying extremely elevated forever.

The market appears to be pricing the recent oil spike as a risk, but not yet as a permanent shock.

That can change.

If oil remains higher for longer, inflation could become more stubborn, the consumer could weaken, and the Federal Reserve may have less room to cut rates.

But for now, markets seem to be looking through the risk because earnings remain solid and investors believe oil prices may moderate over time.

This is why I think the current setup requires balance.

Not blind bullishness.

Not panic selling.

Balance.

Sentiment Has Moved Back Into Greed

The other reason I would be more selective today is sentiment.

A few months ago, there was far more fear in the market. Those are usually the periods where the best opportunities appear.

Today, sentiment has recovered.

The Fear & Greed Index is back in greed territory.

That does not mean stocks must fall.

But it does mean the easy bargains are probably harder to find.

When sentiment is fearful, investors often get paid for buying quality businesses that are temporarily hated.

When sentiment is greedy, investors need to be much more disciplined.

That is why I do not want to chase the market blindly here.

I want to know which stocks still have potential upside, which sectors are still unloved, and which names may be worth researching if volatility creates a better entry point.

This Is Not A Market Where Everything Is Moving Together

The heatmap also tells an important story.

Some large technology and AI-related names continue to dominate attention. Energy has been strong. Healthcare has seen pockets of strength and weakness. Financials, industrials, consumer names, and software are all moving very differently.

This is not a market where every stock is cheap.

But it is also not a market where there are no opportunities.

That is why I think a structured screen can be useful.

Not because it tells us exactly what to buy.

But because it helps us narrow the market down into a more useful research list.

A good screen is not the final answer.

It is the starting point.

Earnings Season Can Still Create Opportunities

We also have another important week of earnings ahead.

There are several major companies reporting, including names across semiconductors, retail, software, consumer, healthcare, industrials, and technology.

This matters because earnings season often creates volatility.

Sometimes stocks fall because the long-term thesis has genuinely changed.

But other times, stocks fall because expectations were too high, guidance was misunderstood, or the market reacts emotionally to short-term noise.

That is where opportunity can appear.

The best time to build a watchlist is before volatility hits.

Because when a high-quality business suddenly drops, you do not want to start your research from zero.

You want to already know what you are looking for.

If you find this market update useful, please consider sharing it.

It helps more investors find the newsletter and allows me to keep building deeper research tools for subscribers.

The Better Question

So no, I do not think “sell in May and go away” is the right framework.

The better framework is:

What should I be preparing to buy if the market gives me a better opportunity?

That is the purpose of this month’s paid spreadsheet.

I screened hundreds of stocks for high-upside potential and then organised the results into a more useful research tool for paid subscribers.

The goal is not to say every stock on the list is a buy.

For paid subscribers, the full spreadsheet is available below - including the ranked Top 25 ideas, sector dashboard, risk flags, methodology, and complete high-upside stock screen.

Paid subscribers get access to the full May High-Upside Stock Screen, plus all future premium spreadsheets and weekly research.

If you want the full workbook and future paid research, you can upgrade below.

Read more

Earnings season has done something very important.

It has pulled the market’s attention away from the noise and back toward the numbers.

Over the past few weeks, investors have had plenty to worry about: geopolitical headlines, oil prices, inflation, interest rates, and whether central banks will be able to cut rates later this year.

But despite all of that, the market has continued to push higher.

The S&P 500 has continued to move higher, with investors refocusing on earnings and fundamentals.

That rebound matters.

Because when markets recover quickly, the easy question is:

“Is it too late?”

But I think the better question is:

“Which companies have actually earned the right to move higher?”

That distinction is important.

Some stocks are rising because sentiment has improved. Some are being pulled higher by sector momentum. Some are simply bouncing because the market has moved from fear back toward greed.

With sentiment moving back toward greed, selectivity matters more than ever.

And this is where investors need to be careful.

When markets are fearful, opportunity is often easier to find. But when sentiment improves and prices start moving higher again, selectivity becomes much more important.

At that point, I do not want to simply chase whatever is going up.

I want to focus on companies where the latest earnings report actually strengthened the long-term thesis.

And so far, this earnings season has given investors plenty to think about.

Corporate earnings have remained stronger than many expected, especially across large-cap technology and AI-related businesses. But it is not just the Magnificent 7 doing all the work. The rest of the market is also showing signs of improvement, even if the leadership remains uneven.

Earnings growth remains strongest among the largest technology companies, but the rest of the market is also showing improvement.

That is why this earnings season is so interesting.

The market is not just rewarding companies for beating expectations. It is rewarding companies that can show durable growth, improving margins, strong cash generation, and a credible path to future earnings power.

But even then, not every stock deserves to rally equally.

Some companies have delivered strong numbers but already trade at stretched valuations. Others have disappointed for good reason. And some are sitting in the middle: high-quality businesses where the latest results may have improved the long-term story, but the market may still not be fully pricing it in.

You can see that unevenness clearly across the market.

Recent market strength has been concentrated in certain areas, while other sectors remain much more mixed.

Semiconductors have been incredibly strong. Mega-cap technology continues to attract capital. But other areas of the market remain much more mixed, including financials, healthcare, energy, and parts of consumer defensive.

So this is not a market where I want to blindly buy everything.

Instead, I want to be more selective.

For me, the best opportunities after earnings usually come from companies where three things are true:

1. The latest numbers confirmed the long-term thesis.

2. The business showed durable growth, operating leverage, or strong cash generation.

3. The valuation still leaves enough upside to be interesting.

That is the focus of today’s article.

After going through recent results, three stocks stood out to me.

Not because they are risk-free. No stock ever is.

And not because the market has completely ignored them.

But because the latest numbers suggest the story may be stronger than the current valuation, sentiment, or investor debate implies.

Each company is very different. Each has a different risk profile. And each one, in my view, deserves a closer look after earnings.

Let’s get into the three stocks.

Read more

The market just delivered one of those rallies that makes investors uncomfortable.

Not because stocks went up.

But because they went up while the macro backdrop still looked messy.

Oil prices moved higher.

The Federal Reserve sounded more cautious.

Treasury yields rose.

War uncertainty remained in the background.

Europe’s economic sentiment weakened.

The UK consumer looked under pressure.

Japan dealt with currency volatility.

And central banks around the world continued to wrestle with the same problem:

Inflation is not fully defeated, but growth is not strong enough to ignore the risks either.

And yet the S&P 500 just staged a sharp V-shaped recovery, rising more than 10% in April.

That was its strongest monthly performance since 2020.

So the obvious question is simple:

Why is the market rallying when the macro backdrop still looks so uncomfortable?

I think the answer is equally simple.

Earnings are doing the heavy lifting.

That does not mean the risks have disappeared.

It does not mean oil, inflation, interest rates, or geopolitics no longer matter.

And it definitely does not mean every stock is attractive again after the rebound.

But it does mean something important.

The market is not necessarily being irrational.

It is responding to the fact that corporate profits are still stronger than many investors expected.

The rally makes sense.

But after a 10% move higher, the next phase becomes much harder.

The Rally Was Not Built on Perfect Macro Conditions

One mistake investors often make is assuming that a rising market means the world has suddenly become safer.

That is not what is happening here.

The macro backdrop is still full of contradictions.

Oil prices are being pulled higher by geopolitical risk and supply concerns.

That matters because higher energy prices can feed into inflation, pressure consumers, raise costs for companies, and make central banks more cautious.

The Fed is also not giving the market a clean green light.

For much of the past year, investors have wanted a simple story:

Inflation falls.

The economy holds up.

The Fed cuts rates.

Earnings rise.

Stocks go higher.

That is the perfect soft-landing script.

But the current environment is not that clean.

Inflation is still sticky.

Energy prices are uncertain.

The labour market has not weakened enough to force aggressive easing.

And policymakers do not sound desperate to cut rates just because equity investors want them to.

That matters because higher rates affect almost everything.

They affect valuation multiples.

They affect borrowing costs.

They affect corporate refinancing.

They affect housing.

They affect consumer credit.

They affect the relative appeal of stocks versus bonds.

So this is not a rally built on perfect macro conditions.

It is a rally happening despite imperfect macro conditions.

That distinction matters.

Because if the macro is not doing the heavy lifting, then something else has to be.

Right now, that something is earnings.

Earnings Are Winning the Tug of War

The market is currently being pulled in two different directions.

On one side, you have macro pressure:

Higher oil.

Sticky inflation.

A cautious Fed.

Geopolitical uncertainty.

Rising yields.

Uneven global growth.

On the other side, you have corporate fundamentals:

Better earnings.

Strong margins.

Resilient consumers.

Continued AI investment.

Healthy business spending.

Large companies still clearing expectations.

And for now, earnings are winning.

That is the key.

Investors may worry about oil.

They may worry about the Fed.

They may worry about geopolitics.

But if companies are still growing revenue, protecting margins, generating cash, and guiding reasonably well, the market has something to anchor itself to.

That is what we are seeing right now.

The economy is not perfect.

But it is not cracking either.

The consumer is slowing in places, but has not collapsed.

Business investment remains strong, especially in areas tied to artificial intelligence, cloud infrastructure, semiconductors, software, and data centres.

And many companies are still managing through a difficult environment better than feared.

That is why stocks have been able to climb through the noise.

Not because the noise does not matter.

But because earnings matter more.

At least for now.

AI Is Still the Engine — But the Market Is Becoming More Selective

The most important theme from this earnings season is not simply that AI remains powerful.

It is that investors are starting to become more selective about AI spending.

That is a very important shift.

For a while, the market was willing to reward almost anything connected to AI.

If a company mentioned AI, the stock could move.

If management increased AI investment, investors often treated it as a sign of ambition.

If a company built more infrastructure, the market assumed future growth would eventually justify it.

But we are now moving into a different phase.

The market is no longer asking:

“Are you spending on AI?”

It is asking:

“What return are you getting on that spending?”

That is the real change.

This is why the contrast between some of the major technology companies has been so important.

Investors rewarded companies where AI and cloud investment appeared to be translating into stronger demand, better positioning, and clearer business momentum.

But they punished companies where spending increased faster than visibility around monetisation.

That does not mean the punished businesses are suddenly broken.

Some of them remain among the highest-quality companies in the world.

But the market is sending a message:

AI spending is no longer automatically good enough.

Investors want evidence.

They want revenue.

They want margin leverage.

They want cash flow.

They want to know whether the capital being deployed today will create attractive returns tomorrow.

That is healthy.

Because the truth is simple:

AI capex will create enormous value for some companies and destroy value for others.

The winners will be the companies that turn investment into durable revenue growth, productivity advantages, margin expansion, or stronger competitive positions.

The losers will be the companies that spend aggressively because they feel forced to, but never earn enough on that spending to justify the capital deployed.

That distinction is going to matter more and more.

And I think it will be one of the defining investment themes of the next few years.

The Consumer Has Not Broken

Another reason the market has held up is that the consumer still looks more resilient than many expected.

This does not mean everything is perfect.

It does not mean lower-income consumers are not under pressure.

It does not mean higher energy prices will not eventually bite.

It does not mean discretionary spending is immune.

But there is a big difference between a consumer that is slowing and a consumer that is breaking.

Right now, the evidence still looks closer to slowing than breaking.

That distinction matters.

A slowing consumer can create valuation resets.

A broken consumer creates earnings resets.

And earnings resets are much more dangerous.

When the consumer slows, high-quality companies can still manage through the environment.

They can cut costs.

They can protect margins.

They can lean on pricing power.

They can keep investing.

They can continue compounding.

But if demand truly breaks, the entire earnings outlook changes.

So far, that is not what the market is seeing.

This is why investors have been willing to look through some of the macro noise.

The consumer is not perfect.

But the consumer is still alive.

And as long as that remains true, earnings have support.

The Fed Is Still the Main Risk

The bullish argument becomes more complicated when you look at interest rates.

Because while earnings are strong, the Fed is not providing the market with an easy path.

Markets love falling rates.

Lower rates usually support valuation multiples.

They reduce borrowing costs.

They make future cash flows more valuable.

They reduce pressure on consumers.

They make stocks look more attractive relative to bonds.

But the Fed is still dealing with inflation that is not fully back to target.

And higher oil prices make that job harder.

This is why the current setup is more fragile than it looks.

The market can handle higher rates when earnings are accelerating.

But it cannot easily handle the combination of:

Higher rates.

Higher oil.

Sticky inflation.

And earnings disappointment.

That is the risk.

Right now, earnings are strong enough to carry the market.

But if that changes, the macro risks investors are currently ignoring could suddenly become much harder to ignore.

That is why I do not think this is a market for blind optimism.

But I also do not think it is a market for blind pessimism.

The right approach is more balanced.

Constructive, but selective.

Optimistic, but valuation-aware.

Willing to buy quality, but not willing to chase everything.

The Global Picture Is Uneven

The US remains the centre of the earnings story, but the global picture is far less clean.

Europe is not collapsing, but sentiment has clearly weakened.

The region is still dealing with the pressure of higher energy prices, sluggish confidence, and central banks that cannot ignore inflation risk.

The UK has its own problems.

Rates remain restrictive.

Inflation is still above target.

And consumer-facing data continues to look weak.

That does not mean every UK stock is unattractive.

In fact, weaker sentiment can sometimes create opportunity.

But it does mean investors need to be careful about assuming the global recovery is broad and smooth.

Japan is facing a different problem.

The yen has been volatile, inflation expectations have moved higher, and the Bank of Japan is under pressure to continue normalising policy.

That creates a difficult environment because a weaker currency can support exporters, but sudden currency moves and higher rates can create volatility quickly.

China looks more mixed.

There are signs of strength in manufacturing, industrial profits, high-tech sectors, and areas tied to advanced production.

But the recovery is still uneven.

Domestic demand remains a question.

Policy support remains targeted.

And investors remain cautious.

So globally, the picture is not terrible.

But it is not clean either.

That is important.

Because when the global macro picture is uneven, the strongest opportunities tend to become more stock-specific.

This is not the type of environment where everything rises equally forever.

It is the type of environment where quality, valuation, balance sheet strength, and earnings durability matter more.

This Is No Longer a Simple Buy-the-Dip Market

A few weeks ago, the opportunity was clearer.

Sentiment was weaker.

Prices were lower.

Fear was higher.

Valuations had reset in several areas.

And investors were being paid more obviously to take risk.

But after a 10% rebound, the setup has changed.

The index has recovered a lot of ground.

Many obvious dips have already been bought.

Some stocks have moved quickly.

And expectations are no longer as low as they were.

That does not mean there are no opportunities.

There are always opportunities somewhere.

But the opportunity is no longer as simple as:

“Stocks fell, therefore buy.”

Now the questions need to be more precise.

Which companies still have earnings power the market is underestimating?

Which companies have durable cash flows that are not fully reflected in the valuation?

Which companies sold off because of temporary fear, not permanent damage?

Which companies are spending heavily but can actually generate strong returns on that spending?

Which companies can protect margins if inflation remains sticky?

Which companies can keep compounding even if rates stay higher for longer?

Those are the questions that matter now.

Because after a sharp rebound, valuation discipline matters more, not less.

The Biggest Mistake Investors Could Make Now

I think there are two obvious mistakes investors could make here.

The first mistake is becoming too bearish simply because the macro backdrop looks messy.

That sounds logical.

But it ignores the fact that earnings are still strong.

Markets do not need perfect conditions to rise.

They need conditions to be better than expected.

And right now, corporate profits are giving investors enough reason to stay constructive.

The second mistake is becoming too bullish simply because the market has rallied.

That is just as dangerous.

A rising market can make every stock look attractive.

It can make investors forget about valuation.

It can make weak companies look strong.

It can make temporary rebounds feel like permanent recoveries.

It can make people chase stocks after the risk/reward has already become less attractive.

That is why I think the correct stance today is not extreme bearishness or blind bullishness.

It is selective optimism.

Stay constructive where earnings support the valuation.

Stay disciplined where the market has already priced in too much good news.

And avoid companies where the narrative is running ahead of the numbers.

What This Market Is Really Telling Us

The message from the market is not:

“Everything is fine.”

And it is not:

“Everything is broken.”

The message is more nuanced than that.

Earnings are still strong enough to support equities.

AI investment remains a major growth engine.

The consumer has not collapsed.

Large companies are still clearing expectations.

And business investment is still supporting parts of the economy.

But the macro is getting messier.

Oil is higher.

Rates are not falling quickly.

Inflation is sticky.

Global growth is uneven.

Central banks are cautious.

And after a 10% rally, the market has less room for disappointment.

That is the real setup.

The rally makes sense.

But the easy money may already have been made.

From here, selectivity matters.

The Bottom Line

I do not think this is a market to be blindly bearish on.

The earnings backdrop is too strong for that.

But I also do not think this is a market where everything deserves to be chased.

The best opportunities are likely to be in companies where the market is still underestimating earnings durability, cash flow strength, balance sheet quality, or long-term return potential.

Not every stock that fell is attractive.

Not every valuation reset is an opportunity.

And not every company spending on AI will create value.

But this is exactly why the current market is interesting.

The index has bounced.

The headlines are noisy.

The macro is messy.

And underneath the surface, individual stocks are being repriced very differently.

That is where the work begins.

The market is no longer handing investors easy answers.

It is handing them contradictions.

Strong businesses with weak charts.

Good companies with compressed multiples.

Quality names with uncomfortable narratives.

Real risks mixed with emotional overreactions.

That is where stock picking becomes valuable.

And that is why, even after this rally, I still think there are opportunities for investors willing to be disciplined.

Not by chasing the broad market.

But by finding the companies where the fundamentals still look stronger than the sentiment.

Want the Stock List Behind This?

On Friday, I published my full May paid screen:

For that article, I screened 182 companies.

95 qualified under the valuation and quality framework.

And from there, I ranked the 10 highest-conviction opportunities based on:

• Valuation

• Business quality

• Balance sheet strength

• Downside risk

• Dividend strength

• Expected return

• Capital allocation potential

The key question was simple:

Where has the market confused short-term fear with long-term damage?

That paid article includes the full ranked list, fair value estimates, expected upside, quality scores, risk scores, income scores, allocation rankings, conviction tiers, and the downloadable May spreadsheet.

If You Found This Useful

If this helped you make sense of the market this week, the best way to support the work is to share or restack this article.

It helps more investors find the newsletter, and it tells me these market breakdowns are useful alongside the paid stock research.

The current market is noisy.

But noise also creates opportunity.

The goal is to stay calm, stay selective, and keep separating temporary fear from long-term damage.

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The market has a habit of doing this.

It takes a real concern…

And then prices it like a permanent impairment.

One spending increase becomes a broken thesis.

One margin question becomes a sector-wide reset.

One bad reaction after earnings becomes a reason to sell anything that looks even slightly uncomfortable.

That is where mispricing starts.

Not because the market is always wrong.

But because the market is often impatient.

This month, I screened 182 companies.

Only 95 qualified under the valuation and quality framework.

And from those, I ranked the 10 highest-conviction opportunities based on:

Valuation
Business quality
Balance sheet strength
Downside risk
Dividend strength
Expected return
Capital allocation potential

The question this month was simple:

Where is the market punishing the wrong stocks?

Not the cheapest stocks.

Not the biggest losers.

Not the most obvious dips.

But the companies where the fundamentals still look stronger than the sentiment.

Why May’s Screen Is Different

April was about broad valuation resets.

May is about earnings reactions, sector fatigue, and quality businesses trading below their normal valuation ranges.

That difference matters.

Over the past few weeks, the market has not simply rewarded companies for beating numbers.

It has punished anything that raises a harder question:

Can AI spending generate attractive returns?

Are software multiples still too high?

Is healthcare risk now fully priced in?

Are high-quality compounders finally becoming attractive again?

Is the market overreacting to temporary uncertainty?

That is the setup.

The market is not selling everything equally.

It is becoming more selective.

And selective markets create better stock-picking opportunities.

What Stood Out This Month

The biggest opportunities were not necessarily in the obvious places.

They appeared where investors are currently most uncomfortable.

1. Healthcare is still deeply out of favour

One of the highest-ranked areas in the May screen came from healthcare.

That matters.

This is a sector where the market has become much more cautious.

Investors are worried about:

Regulation
Pricing pressure
Competition
Medical cost trends
Political scrutiny
Whether previous valuation premiums were too optimistic

Those concerns are real.

But after the reset, the numbers look very different.

Several high-quality healthcare businesses now trade at valuations that imply a much more pessimistic future than their long-term fundamentals may justify.

That does not mean the risks have disappeared.

It means the price may finally be reflecting them.

And in some cases, possibly over-reflecting them.

2. Quality technology is being reset

Technology still appeared heavily in the screen.

But this month was not about chasing the most obvious AI names.

It was about quality technology businesses where the multiple has compressed sharply.

Some of these companies are still highly profitable.

Some have strong balance sheets.

Some continue to generate attractive free cash flow.

But the market is no longer willing to pay the same premium unless growth is obvious, margins are protected, and AI risk can be clearly explained.

That is exactly where the screen became interesting.

Not because every technology stock is attractive.

But because some quality businesses are being valued as if their long-term earnings power has permanently weakened.

3. Boring compounders are quietly becoming interesting again

Not every opportunity comes from a dramatic crash.

Some come from slow, quiet multiple compression.

These are the businesses that rarely dominate financial headlines.

They are often:

High-margin
Repeatable
Cash-generative
Asset-light
Disciplined with capital
Less exciting than the market’s favourite stories

They may not have the loudest narratives.

But when these companies move from premium valuations to more reasonable ones, long-term expected returns can improve quickly.

That was a clear pattern in this month’s results.

4. The highest upside was not always the highest ranking

This is important.

The ranking is not purely based on upside.

If it were, the list would simply reward the largest fair value gaps.

But that is not how I want to allocate capital.

The spreadsheet ranks companies using a blended allocation score:

40% valuation
35% quality
15% risk
10% income

That means a company needs more than just upside.

It also needs business quality, balance sheet resilience, dividend support, and downside protection.

That is why this month’s top 10 is not just a list of stocks that fell the most.

It is a mix of quality businesses where valuation, fundamentals, and risk/reward now look more interesting.

The Key Question

This month’s spreadsheet is not asking:

“What is down the most?”

It is asking:

“Where has the market confused short-term fear with long-term damage?”

That is a very different question.

A falling share price is not enough.

A lower multiple is not enough.

A stock being down 30%, 40%, or 50% does not automatically make it attractive.

Sometimes the market is right.

Sometimes the business is weaker.

Sometimes the old valuation was simply too high.

That is why the framework filters for quality first.

The best opportunities this month are the companies where:

The business still appears durable
The valuation has compressed
The balance sheet remains manageable
Free cash flow is still attractive
The market narrative has turned negative
And the long-term earnings power may be underappreciated

That is where expected returns can improve.

Inside the May Spreadsheet

The full May spreadsheet includes:

The complete ranked list
Fair value estimates
Expected upside
Bear case considerations
Quality scores
Valuation scores
Risk scores
Income scores
Allocation rankings
Conviction tiers
The full capital allocation framework

The goal is not to tell you to buy everything.

It is to show where the risk/reward looks most attractive after earnings season.

Because in this kind of market, discipline matters.

The market is giving investors more opportunities than it was a few months ago.

But it is also giving them more traps.

The spreadsheet is designed to help separate the two.

Below, I reveal the full ranked list, including the top 10 stocks, fair value estimates, expected upside, quality scores, risk scores, income scores, allocation rankings, and the full May spreadsheet.

Read more

Visa, Mastercard and American Express are often grouped together as “payment stocks.”

But that description undersells what these businesses really are.

And with Visa and Mastercard both reporting earnings this week, this comparison feels especially timely.

Investors are about to get a fresh look at payment volumes, cross-border spending, consumer resilience, margins, and whether these premium valuations are still justified.

But short-term earnings are only part of the story.

The bigger question is far more important:

If I could only buy one of these three payment giants today, which one offers the best mix of quality, future protection, valuation, dividend growth, and long-term market-beating potential?

At their best, these companies are not just exposed to consumer spending.

They sit underneath global commerce itself.

Every time someone taps a card, pays online, books a hotel, buys groceries, travels abroad, pays for software, or spends through a digital wallet, one of these networks can benefit.

That is what makes this group so powerful.

These are not ordinary financial companies. They are some of the most entrenched businesses in global payments, supported by scale, trust, acceptance, brand power, and the long-term shift away from cash.

And that long-term trend is still visible in the numbers.

Payment volumes have continued to climb over time, even through recessions, inflation shocks, rate cycles, and major changes in consumer behaviour.

That is the appeal of this group.

As more spending moves away from cash and into digital payment networks, Visa, Mastercard and American Express all have a structural tailwind behind them.

But here is where investors need to be careful.

One of the biggest mistakes investors can make is treating Visa, Mastercard and American Express as interchangeable businesses.

They are not.

Visa and Mastercard are open-loop payment networks. They sit between banks, merchants and consumers, processing enormous transaction volumes without taking the same direct lending risk as a card issuer.

American Express is different.

Amex operates a closed-loop model, meaning it acts as the network, the issuer, and the relationship owner. That gives American Express more control over the customer relationship, especially with affluent consumers, but it also gives the business more exposure to credit cycles, lending risk, and consumer stress.

That difference matters.

Visa and Mastercard often look more like global toll roads than traditional financial companies. They benefit from scale, network effects, and high incremental margins, without carrying the same balance-sheet risk as a lender.

That is why their profitability profile is so exceptional.

Very few businesses can sustain margins like this over long periods of time.

And that is exactly why Visa and Mastercard usually trade at premium valuations.

The market knows these are exceptional businesses.

American Express is different again.

It does not have the same pure toll-road model as Visa or Mastercard, but it does have a powerful premium brand, a loyal customer base, and a closed-loop network that gives it deeper insight into both cardholders and merchants.

That can be a real advantage.

But it also means the stock needs to be judged differently.

So this comparison is not simply about asking which company is “best.”

A great business can still be a poor investment if too much optimism is already priced in.

And a cheaper stock can still be a value trap if the market is correctly discounting higher risk.

That is why I wanted to compare Visa, Mastercard and American Express through the lens that actually matters for investors today:

• Business quality

• Future protection

• Downside and recession risk

• Dividend growth potential

• Current valuation

• Potential to outperform the S&P 500 over the next decade

Each company has a different strength.

Visa may be the safest and most predictable.

Mastercard may be the strongest long-term compounder.

American Express may look like the obvious bargain.

But once I adjusted for business model, credit exposure, valuation, dividend growth and downside risk, only one stood out as the stock I would be most willing to buy today.

Paid members get the full ranking, valuation breakdown, buy zones, downside risks, and my top pick today.

Read more

A few weeks ago, the market looked like it was pricing in something much worse.

Oil was surging.
Geopolitical risk was spiking.
Investors were de-risking fast.
And for a brief moment, it felt like the market was starting to brace for a much uglier outcome.

Now the mood has flipped.

The S&P 500 has ripped back toward record highs. Oil has cooled off. Bond yields have steadied. And sentiment has recovered quickly enough that fear is already starting to give way to something closer to optimism again.

That is a big shift in a short period of time.

But under the surface, the picture is less clean than the headline indexes make it seem.

The broader market has recovered sharply, but plenty of individual stocks have not. A surprising number are still sitting near 52-week lows, even as the index pushes higher and investors start looking ahead to the next phase of the rally.

That matters now, because the market is entering a new test.

The panic phase was driven by headlines.
The next phase will be driven by earnings.

Over the next few weeks, investors are going to find out which companies were merely caught in the volatility… and which ones are actually facing weaker fundamentals, weaker demand, or a lower earnings power than the market used to assume.

That distinction matters.

Stocks at 52-week lows often look cheap on the surface. But low prices alone do not create value. In many cases, the market is simply correcting for weaker growth, weaker margins, or a business that deserves a lower multiple than it once had.

That is why I did not want to rely on price alone.

Instead, I re-ran the valuation work on a basket of stocks trading near 52-week lows, using a DCF-based framework to see which names still offered a real margin of safety - and which ones only looked cheap because the market had already priced in a weaker future.

Most did not make the cut.

Only two did.

Why most 52-week lows fail the test

A stock trading near a 52-week low can look tempting.

The price is down.
The chart looks ugly.
Sentiment is weak.
And that is often enough to make investors assume they are looking at value.

Sometimes they are.

But very often, they are not.

A stock does not become cheap just because it has fallen. In many cases, the decline is simply the market adjusting to a weaker reality - slower growth, lower margins, weaker guidance, rising competition, or a business that no longer deserves the multiple investors once gave it.

That is where a lot of people get caught.

They see the drawdown.
They anchor to the old high.
And they mistake a lower price for a better opportunity.

But the old high is not what matters.

What matters is what the business is worth today based on the cash it can generate going forward.

That is why I did not want to build this list around price action alone. I wanted to know which of these 52-week low stocks still offered enough upside based on future cash flows - and which ones only looked attractive because the market had already repriced them lower.

So I ran them through a DCF-based process.

Not as a perfect tool, because no valuation model is. But as a way to force discipline.

For each company, the key question was simple: does the current price still leave enough room for a compelling return, even under assumptions that are not overly generous?

That matters even more right now.

Because with earnings season underway, the market is about to become much less forgiving. Stocks that are already weak will need to show real resilience to stop sliding. And if they cannot, being near a 52-week low today may end up meaning very little.

That is why this screen was useful.

It helped separate the names that are merely down… from the names that may actually be undervalued.

The framework I used

There is no perfect way to value a stock.

A DCF is not a magic answer. Change the assumptions, and the output changes with them. But that is also exactly why it is useful. It forces you to be explicit about what has to happen for a stock to be worth buying.

For this screen, I was not trying to find the stocks with the biggest drawdowns or the most dramatic charts. I wanted to find the names where the current price still looked attractive relative to a realistic range of future cash flows.

So the process was built around a few simple questions.

1. Is the business still high quality?

The first filter was not valuation. It was quality.

If a company is near a 52-week low because the business itself is weakening, the lower price may not be an opportunity at all. It may just be the market catching up to a worse reality.

So I wanted businesses that still showed signs of durability - strong market position, healthy margins, resilient demand, and a model that can continue compounding over time.

2. Are the growth assumptions still believable?

This is where a lot of “cheap” stocks fall apart.

A stock can look optically inexpensive if investors are still anchoring to old expectations. But if the future growth path is now lower, the fair value is lower too.

So for each company, the key question was not whether it used to deserve a higher price. It was whether reasonable forward assumptions still supported upside from here.

3. Is the valuation leaving enough room for error?

This is the margin-of-safety test.

Even if the business is solid, that does not automatically make the stock a buy. The current price still has to leave enough room for decent returns without relying on perfect execution.

That is especially important in this kind of market. When sentiment swings quickly and earnings matter more, I do not want a valuation that only works if everything goes right.

4. Is the downside understandable and survivable?

Some stocks are at 52-week lows because the market is overreacting.

Others are there because the risks are real.

So I also wanted to understand what was actually driving the weakness. Was this mainly sentiment? A temporary slowdown? A margin reset? Or something more structural?

If the downside case looked too open-ended, or the business needed too many things to go right to recover, that was usually enough to move on.

5. Would I still want to own it if the recovery takes time?

This matters more than people think.

A stock near a 52-week low does not have to bounce quickly to be a good investment. But if the thesis only works on the assumption of a fast rerating, it is probably not a very strong thesis.

The names that stood out were the ones where I could still make the case even if the market stayed cautious for a while.

What this process was really designed to do

At a high level, this was not a hunt for the most beaten-down stocks.

It was a hunt for the mispriced ones.

That is a very different exercise.

A large drawdown can create opportunity. It can also create noise. And when a stock is sitting near a 52-week low, the easiest mistake is to assume the discount is the opportunity.

Sometimes it is.

But often, the market is simply telling you that the business, the expectations, or the valuation had to reset.

This framework was my way of filtering that out.

Because the goal was not to find stocks that looked cheap compared with where they used to trade.

It was to find stocks that still looked attractive based on what they can realistically earn from here.

Once I put the list through that lens, the field narrowed quickly.

A stock that failed the test: Novo Nordisk

Novo Nordisk looked tempting at first glance.

The stock is near its 52-week low.

Its forward P/E has compressed to about 12x, far below its five-year average of roughly 30x. Its dividend yield has jumped to around 4.6%, which is also well above normal.

That is exactly the kind of setup that can pull investors in.

But when I ran the DCF, the story changed.

My intrinsic value came out at roughly $39.37, versus a market price around $40, leaving a negative margin of safety of about 1.6%. Even the implied upside to the Wall Street target was only around 8%.

So while Novo looked much cheaper than usual, it still did not look cheap enough.

That is the difference between a stock being down a lot and a stock being undervalued.

Novo may recover over time. But for this list, it did not offer enough valuation support to make the final cut.

A stock that came close, but still did not make the cut: Medtronic

Unlike Novo Nordisk, Medtronic did not fail because it still looked outright overvalued on my numbers.

If anything, the stock looked roughly fairly valued to modestly undervalued, with my DCF pointing to value in the high $80s to low $90s against a share price around $86.

But that was also the problem.

For this list, I was not looking for stocks that merely looked reasonable. I was looking for names where the valuation itself created a more obvious opportunity.

And Medtronic did not quite get there.

The forward P/E and dividend yield also sit close to their historical norms, which makes this look less like a market overreaction and more like a stock trading in a range that is broadly understandable. There may be upside from here, and the Wall Street target suggests as much, but the valuation discount was not wide enough for me to put it in the top tier.

So Medtronic was not a clear reject in the same way as Novo Nordisk.

It was more of a near miss.

A stock I could understand owning, but not one that stood out enough to make my final cut when I was specifically looking for the strongest opportunities near 52-week lows.

That was the pattern across much of the list.

Some stocks looked cheaper than usual, but still not cheap enough. Others were solid businesses, but the valuation discount was too thin to make them stand out. And a few simply needed too much to go right.

In the end, only two names offered the combination I was looking for:

• a business I still wanted to own

• assumptions I could reasonably defend

• and a valuation that left enough room for upside from here

Here are the two names that still offered the combination of quality and valuation support I was looking for.

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S&P 500 Performance in April so far

Markets have already bounced.

That usually convinces investors the opportunity is gone.

Often, it is.

Broad selloffs create broad discounts at first. But once the rebound begins, the market stops rewarding everything equally. The easy upside disappears quickly. What remains is narrower, more selective, and often far more interesting.

That is the setup this month.

The S&P 500 has recovered sharply from its recent lows, and sentiment has improved across several parts of the market. But even after that rebound, a small group of large-cap companies still trade at meaningful discounts to consensus value.

This report focuses on those remaining gaps.

Not where prices have already recovered, but where valuation still appears disconnected from business quality, earnings power, and long-term upside.

Large-cap opportunities rarely stay obvious for long.

Once markets stabilize, the broad repricing phase ends. What remains is a narrower group of companies where the valuation reset has not fully reversed despite durable fundamentals, strong cash generation, and analyst expectations that still point materially higher.

Rather than chasing what has already bounced hardest, this report isolates the remaining S&P 500 names where upside still appears asymmetric relative to downside risk.

This Month’s Screening Framework

To identify those opportunities, I screened the S&P 500 for large-cap companies meeting the following criteria:

• Market capitalisation above $10B

• Minimum 20% projected 12-month upside

• Analyst consensus of Moderate Buy or Strong Buy

• Durable underlying business quality

• Balance sheet and cash flow profile strong enough to support real capital allocation

After applying those filters, 500 companies were screened.

From those, 58 qualified.

That matters.

In a broad selloff, many stocks can look optically cheap. After a rebound, far fewer still do. That makes this month’s list more selective and, in many cases, more actionable.

Some names have already seen their valuation gaps close. Others have not. In several cases, the market appears to have moved on faster than the fundamentals have changed.

Those are the opportunities this report aims to isolate.

April at a Glance

• Companies screened: 500

• Final qualifying stocks: 58

• Minimum projected upside: 20%

• Universe: S&P 500, market caps above $10B

• Objective: identify large-cap companies where valuation, quality, and forward upside still diverge meaningfully even after the rebound

From the final qualifying group, a smaller subset stands out most clearly based on:

• valuation support

• business durability

• analyst alignment

• risk-adjusted upside

• downside support from current levels

Five stand out most clearly this month.

They are ranked based on:

• Upside potential

• Business quality

• Valuation compression

• Downside support levels

• How actionable the setup still looks after the recent rebound

The companies below represent the clearest remaining opportunities currently screening in the S&P 500.

This Month’s Top 5 High-Upside S&P 500 Stocks

Several names have already bounced sharply from the lows.

These five still stand out because the upside has not fully closed.

The lower-ranked names are interesting.

The top-ranked names still look actionable.

#5 — Newmont Corporation (NEM)

Newmont stands out this month for a different reason than the other names on this list.

The opportunity here is not being driven by a high-growth technology narrative or a temporary sentiment reset around software or financials.

Instead, it comes from a large-cap, cash-generative business where the market still appears to be underestimating the combination of earnings power, margin strength, and valuation support.

That makes Newmont one of the more interesting remaining setups in the screen.

What the Market Is Pricing In

At current levels, investors still appear cautious on the broader gold and mining complex.

That hesitation is understandable.

Mining businesses are cyclical, operationally intensive, and often treated as lower-quality opportunities than asset-light compounders. They also tend to screen cheaply for a reason when commodity expectations are unstable.

But Newmont’s current setup looks stronger than that broad market perception suggests.

The company remains the clear scale leader in the space, and the underlying financial profile has improved materially.

Valuation Context

Even after the recent rebound, Newmont still trades at a notable discount to its own historical valuation.

Its forward P/E currently sits around 12.2x, versus a 5-year average closer to 15.9x.

That matters.

Because while the stock has recovered from earlier weakness, the market is still valuing the business below its normal earnings multiple despite a much stronger profitability backdrop than investors typically associate with the sector.

That creates a more attractive setup than the headline dividend yield alone might suggest.

Business Quality

This is where the story gets more interesting.

Newmont’s valuation screen on the surface looks mixed, largely because sales-based multiples remain elevated relative to the sector. But the underlying operating picture is much stronger than that first impression suggests.

Growth metrics remain robust, including:

• 21.3% revenue growth

• 56.3% EBITDA growth

• 86.2% EBIT growth

• 123.4% EPS diluted growth

• 46.5% forward EPS growth

• 28.1% long-term EPS growth expectation

Those are not weak numbers.

They point to a business benefiting from a much stronger earnings environment than the market may still be fully crediting.

Profitability is also unusually strong for the sector.

Newmont currently carries an A+ profitability grade, supported by:

• 63.2% gross margin

• 48.6% EBIT margin

• 61.1% EBITDA margin

• 31.3% net income margin

• 41.9% levered free cash flow margin

• 17.5% return on total capital

For a mining company, that is a very strong operating profile.

Why It Ranks #5

Newmont ranks #5 this month because it combines three things that rarely show up together cleanly:

• large-cap scale

• strong profitability

• a forward valuation still below its historical norm

The current dividend yield of roughly 0.9% is well below its 5-year average, which may make the stock look less attractive to income-focused investors at first glance.

But that lower yield is really just the mirror image of a stronger share price and improved earnings outlook.

For this screen, the more important point is that the stock still appears reasonably valued relative to its forward earnings power.

Newmont is not the cleanest business model on this list.

It is more cyclical, more commodity-linked, and less predictable than some of the other names ranked above it.

That is why it sits at #5 rather than higher.

But for investors looking for a large-cap name where the valuation still looks supportive and the profitability profile is stronger than the market may appreciate, Newmont remains one of the more compelling remaining opportunities in the screen.

The next four names offer either a larger valuation gap, stronger downside support, or a better overall combination of business quality and upside from current levels.

Two still screen as clear outliers even after the recent rebound.

Paid members unlock:

• The remaining Top 4 ranked stocks

• Exact buy ranges

• Downside scenarios

• The full screening dataset

• My allocation framework across the list

• Which names are actionable now versus watchlist-only

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Most stocks trading near 52-week lows are not bargains.

They are there for a reason.

Sometimes that reason is slowing growth.
Sometimes it is deteriorating fundamentals.
Sometimes the market is simply correcting a valuation that had drifted too far from reality.

That is what makes this part of the market so dangerous.

But it is also what makes it interesting.

Because every now and then, fear does not just hit weak businesses.

It hits strong ones too.

Market Update

The past few weeks have been a reminder that this market is still being driven as much by fear as by fundamentals.

Last 30 days S&P 500 Heatmap

What started as a geopolitical shock quickly spilled into everything else. Oil surged as tensions in the Middle East escalated and investors rushed to price in the risk of a wider disruption.

That immediately brought inflation back into focus:

…pushed rate-cut expectations around:

….and created another burst of volatility across equities.

Since then, sentiment has improved.

Signs of de-escalation and ceasefire hopes have helped cool some of the panic. Oil has come off its highs, markets have bounced, and investors have started to price out the worst-case scenario. But while the headlines have become less severe, the reset in valuations has already happened.

And that is the part that matters.

When markets go through this kind of repricing, they do not always separate weak businesses from strong ones very well. In the short term, premium multiples get compressed, quality gets sold alongside everything else, and stocks that looked untouchably expensive a few months ago can suddenly start to look much more reasonable.

That does not mean every stock near a 52-week low is worth buying.

Far from it.

In many cases, the market is correctly identifying a weaker business, a fading growth story, or a stock that simply never deserved the valuation it once had.

But every now and then, macro fear creates a different kind of setup.

Not in broken businesses.

In strong ones.

That is the focus of this article.

The question is not which stocks are down.

Plenty of stocks are down.

The real question is:

Which high-quality businesses are now trading near 52-week lows for reasons that matter less over the long term than the market currently believes?

And with earnings season starting to build again, this is exactly the kind of setup worth paying attention to.

What I Looked For

I was not looking for the ugliest charts or the biggest drawdowns.

I was looking for something much more specific:

• High-quality businesses with durable competitive advantages

• Stocks near 52-week lows after a meaningful valuation reset

• Setups where the long-term thesis still looks intact, even if short-term sentiment has clearly weakened

In other words, I was not trying to find broken companies.

I was trying to find strong companies that the market has become much less willing to pay up for.

That distinction matters.

Because a stock can be down for good reason.

And a stock can be near its lows without offering any real margin of safety at all.

The opportunity only starts to become interesting when three things happen at once:

• The business remains strong

• Expectations come down

• The starting valuation improves enough to lift forward returns

That is where selective buying starts to make sense.

And that is also why this is not really a screen for “cheap stocks.”

It is a screen for premium businesses with lower expectations.

Some of the names below are not screaming bargains.

Some are closer to fair value than deep value.

But all five, in my view, have become more interesting because the market is no longer pricing them with the same confidence it was just a few months ago.

Below are the 5 bargain stocks near 52-week lows that stand out most to me right now.

1. S&P Global (SPGI)

What S&P Global Actually Does

S&P Global is one of those businesses that looks simple on the surface, but becomes much more powerful the closer you look.

Most investors know the company for its credit ratings business. That alone is a major franchise. Through S&P Global Ratings, the company plays a central role in global debt markets, helping issuers access capital and giving investors a standardized view of credit risk.

But S&P Global is much more than a ratings agency.

The business also owns leading positions in market data, benchmarks, index licensing, and analytics. That includes well-known assets tied to the S&P 500, commodity and mobility data, and a broader ecosystem of financial intelligence tools used across capital markets.

In other words, this is not a cyclical commodity business or a disposable software tool.

It is a deeply embedded information business with recurring revenues, strong pricing power, high margins, and an increasingly important role in how global markets function.

That is why it has historically commanded a premium valuation.

And also why it becomes interesting when that premium starts to compress.

Why SPGI Has Struggled and Is Sitting Near a 52-Week Low

S&P Global is down 20% year to date, with the stock now trading around $415, much closer to its 52-week low of roughly $382 than its high near $579.

At first glance, that kind of drawdown can look unusual for a business of this quality.

But the explanation is fairly straightforward.

The market has become much less willing to pay peak multiples for high-quality compounders, especially those with premium valuations and some sensitivity to macro conditions. In SPGI’s case, the recent backdrop of higher oil prices, renewed geopolitical stress, hotter inflation data, and shifting rate expectations has added another layer of caution across financials and information businesses tied to capital markets activity.

That matters because while S&P Global is an exceptional business, it is not completely immune to macro slowdowns.

Debt issuance can cool. Transaction activity can slow. Sentiment around financial-market-linked businesses can weaken. And when that happens, even elite franchises can go through a valuation reset.

That looks like exactly what has happened here.

Importantly, this does not look like a broken business.

Analysts still expect EPS of $19.62 in 2026 and $22.07 in 2027, implying a healthy growth path from here. Quarterly results have also remained solid overall, with the company beating expectations in three of the last four quarters, and long-term EPS growth expectations still sit around the mid-teens.

So the issue here is not that the business has fallen apart.

The issue is that the stock has been repriced.

Why Now May Be a Great Time to Buy S&P Global

This is where the setup starts to get more interesting.

Even after years of premium treatment, SPGI now trades at roughly 21x forward earnings, well below its 5-year average of 30x.

That is a very meaningful reset for a business with this kind of margin profile, competitive positioning, and historical compounding record.

The profitability remains excellent.

Gross margins sit above 70%.
EBIT margins are above 42%.
EBITDA margins are close to 50%.
Levered free cash flow margins remain above 31%.

Those are elite numbers.

This is still a business with strong pricing power, high recurring revenue, and a role in the financial system that is extremely difficult to replicate. The ratings franchise alone benefits from enormous trust, scale, and relevance. Layer on top the index business, analytics, and market intelligence capabilities, and you have a company that still looks far more like a long-term compounder than a business facing structural decline.

That is what makes the current valuation more compelling.

The intrinsic value work points to a fair value of roughly $550, implying about a 25% margin of safety from current levels. Wall Street’s target near $544 also suggests roughly 31% upside.

And perhaps most interestingly, the reverse DCF implies the market is only pricing in around 6.3% growth from here.

For a company with a 5-year free cash flow CAGR of 11% and a 10-year CAGR of 16%, that hurdle does not look especially demanding.

Valuation

The forward P/E now sits around 21x, versus a 5-year average of 30x.

The DCF arrives at an intrinsic value of roughly $550, with the following range:

• Low case: $472

• Base case: $550

• High case: $640

At a current price near $415, that implies:

• roughly 25% margin of safety to base value

• around 33% upside in the medium case

• and a setup that now looks materially more attractive than it did when the market was still willing to pay close to 30x earnings for the same business

The reverse DCF is also telling.

At today’s price, the market appears to be pricing in only about 6.3% long-term growth.

For a company with SPGI’s asset quality, moat, and long-term cash flow profile, that looks more conservative than excessive.

My Take

S&P Global is exactly the kind of stock I want to pay attention to when markets get more fearful.

Not because it is a deep-value name.

And not because it suddenly became statistically cheap against low-quality peers.

But because this is a premium business that the market has become much less willing to pay peak multiples for, even though the long-term thesis still looks very much intact.

The business remains highly profitable, deeply entrenched, and difficult to replicate. Growth is not explosive, but it does not need to be. When a company of this quality goes from nearly 30x forward earnings to just over 21x, while still offering solid earnings growth and robust cash generation, the forward setup starts to look much more compelling.

For investors willing to focus on quality first and valuation second, SPGI looks like one of the more interesting 52-week-low setups in the market right now.

Verdict

BUY

S&P Global is a good example of what happens when the market stops paying peak multiples for quality. The business remains strong, but the valuation has reset enough to make the setup much more interesting.

Across the rest of this list, the same pattern shows up in different ways - from elite compounders with more obvious consumer or software exposure, to under-the-radar names where expectations now look materially lower than the underlying business quality.

Paid members get the remaining 4 picks, full valuation breakdowns, and my final ranking.

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Most investors do not lose money by buying bad businesses.

They lose money by overpaying for great ones.

That is especially true with the Magnificent 7.

These are some of the best companies in the world. But great businesses do not automatically make great investments. What matters is what is already priced in.

Two months ago, I ran discounted cash flow models across all seven names to see which ones still offered real margin of safety.

Since then, prices have moved. Expectations have shifted. Sentiment around AI, capital spending, and mega-cap tech has changed again.

So I ran the numbers again.

The question is not which businesses are high quality. We already know they are.

The real question is:

Which of these stocks still justify their valuation today - and which ones still require too much optimism?

In this update, I revisited each of the Magnificent 7 using refreshed assumptions around growth, cash flow, and valuation.

Some still look attractive.

Some look closer to fair value.

And a few still look priced for more perfection than I am willing to pay for.

Before getting into each stock, here is the key point:

This is no longer a market where investors can buy mega-cap tech blindly and assume valuation does not matter.

Multiples have already started to compress in parts of the market. Expectations are getting tighter. And as that happens, the gap between great company and great stock matters more.

That is why I wanted to rerun the models now.

Because when leadership narrows, pricing changes fast.

And when pricing changes fast, expected returns can change with it.

What Changed?

Compared with my last review, three things matter most:

1. Prices moved.
Even when the business stays the same, a different starting price changes the return profile.

2. Expectations shifted.
Some of these names are no longer being priced like unstoppable straight-line winners. That creates opportunity in a few cases - but not all.

3. Valuation dispersion is widening.
The Magnificent 7 are often discussed as one group, but the market is not valuing them that way anymore. Some now look far more attractive than others.

That makes this a much better environment for selective buying - and a worse one for lazy buying.

Microsoft (MSFT)

Valuation

Microsoft now trades at roughly 21x forward earnings, well below its 5-year average of 31x.

That is a meaningful reset for one of the market’s highest-quality businesses and immediately puts the stock back into serious consideration from a valuation perspective.

The setup is simple: this is not a broken business trading cheaply for a reason. It is a premium business that has become materially less expensive.

DCF Snapshot

• Reverse DCF / implied growth: 8.3%

• 5Y FCF CAGR: 8%

• 10Y FCF CAGR: 13%

• Low case intrinsic value: $440

• Base case intrinsic value: $481

• High case intrinsic value: $526

  

• Current price: ~$373

• Margin of safety: ~22.5%

What Changed

Since my last review, the main change is straightforward: the stock price fell and the multiple compressed.

That matters because expected returns improve when the entry price drops, even if the business itself remains largely intact. In Microsoft’s case, the reset in valuation has made the stock more interesting without requiring a dramatic change in the underlying thesis.

What the Market Is Pricing In

At today’s price, the market appears to be assuming a much more moderate growth path than Microsoft has historically delivered. The reverse DCF suggests the stock only needs to compound free cash flow at roughly 8.3% to justify the current valuation.

For a business with Microsoft’s scale, recurring enterprise relationships, cloud exposure, and AI optionality, that hurdle does not look especially demanding.

In other words, the market is no longer pricing Microsoft like an untouchable compounder. It is pricing it much closer to a mature platform - and that is where the opportunity starts to improve.

My Take

Microsoft remains one of the highest-quality businesses in public markets, and the valuation is finally starting to reflect more caution than confidence.

That does not mean the stock is risk-free. Expectations around Azure, AI monetisation, and enterprise demand still need to be met. But when a business of this quality trades materially below its historical multiple, while still offering a base-case value comfortably above the current price, the risk/reward becomes far more attractive.

Verdict

BUY

Microsoft is currently my #3-ranked stock in the Magnificent 7.

Microsoft is one of the few names where the recent reset has clearly improved the setup. But across the rest of the Magnificent 7, the picture is far less uniform. Some still offer real upside. Others still look priced for more optimism than I’m willing to pay for.

Below, I break down the remaining six names - including which are still buys, which now look closer to fair value, and which still do not offer enough valuation support at today’s prices.

Paid members unlock the remaining 6 stocks, full fair values, and my complete ranking.

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The market doesn’t misprice everything.

But when it does…

It rarely does it subtly.

It compresses multiples across entire sectors.
It sells quality alongside risk.
It prices uncertainty… as if it’s permanent.

And that’s where opportunity lives.

This month, I screened over 80 stocks.

Only 41 met the quality threshold.

And from those…

I’ve ranked the 10 highest-conviction opportunities based on expected return, balance sheet strength, and capital efficiency.

One still shows ~60% upside — even after the recent market bounce.

What’s Happening Right Now

Over the past few weeks, we’ve seen:

• Big Tech rerate from ~24x → ~19–20x forward earnings

• High-quality software names cut in half (in some cases)

• Healthcare trading below historical valuation bands

• Financials drifting despite stable fundamentals

Not because fundamentals collapsed.

But because:

The market is repricing risk - indiscriminately.

And when that happens:

Expected returns improve.

Where the Market Looks Most Wrong Right Now

March was about identifying undervalued compounders.

April goes one step further.

This month answers:

“Where is the market most wrong right now?”

Not just cheap stocks.

But:

• High-quality businesses

• With durable earnings power

• Trading below intrinsic value

• Where multiple compression ≠ fundamental deterioration

How April’s Spreadsheet Is Built

This month’s ranking framework prioritises:

1️⃣ Mispricing Severity

• % gap to 12-month fair value

• Relative to historical valuation ranges

2️⃣ Quality of the Business

• ROIC

• Free cash flow durability

• Margin structure

• Balance sheet strength

3️⃣ Expected Return Profile

• 12-month expected return

• Bear case return

• Downside asymmetry

4️⃣ Allocation Ranking

A combined score of:

• Upside

• Quality

• Balance sheet

• Risk-adjusted return

What Stands Out This Month

1️⃣ Big Tech Is No Longer “Expensive”

Names like:

• Microsoft

• Meta

• Amazon

are now trading closer to market multiples than premium ones.

These are businesses with:

• Structural revenue growth

• Massive free cash flow

• Dominant competitive positioning

Yet multiples have compressed as if growth is fading.

The setup today is very different to 2021.

You’re no longer paying peak multiples for peak narratives.

2️⃣ Software Has Been Reset

Some of the highest-quality software businesses are now trading at levels not seen in years:

• Intuit

• Adobe

• Salesforce

• ServiceNow

In many cases:

• Revenue growth remains intact

• Margins are stable or improving

• Cash flow is strong

But valuations have reset dramatically.

This is multiple compression - not business deterioration.

3️⃣ Healthcare Remains Mispriced

Healthcare continues to offer some of the most asymmetric setups:

• Novo Nordisk

• UnitedHealth

• Zoetis

• Abbott

These businesses benefit from:

• Non-cyclical demand

• Strong pricing power

• Long-term structural growth

Yet many are trading below historical valuation norms.

4️⃣ “Boring” Compounders Are Attractive

Names the market ignores:

• S&P Global

• ADP

• MSCI

• Accenture

These are:

• High-margin

• Asset-light

• Recurring revenue businesses

They rarely look exciting.

But they consistently compound.

And when they dip below fair value…

That’s where long-term returns are built.

How To Use This Spreadsheet

This is not a “buy everything” list.

If I were deploying fresh capital today…

this is where I’d start.

It’s a capital allocation tool.

You can approach it in three ways:

→ Highest Upside

Focus on:

• % from fair value

• Expected return

→ Highest Quality

Focus on:

• ROIC

• Balance sheet strength

• Margin profile

→ Balanced Allocation

Use:

• Allocation ranking

• Conviction tiers

Risk Context

Not every name here is immune to volatility.

Some will:

• Fall further in a recession

• Trade sideways for months

• Look “wrong” before they look right

That’s why the framework includes:

• Bear case returns

• Balance sheet filters

• Quality scoring

Risk doesn’t disappear when valuations compress.
But expected returns improve.

Why This Matters Now

Markets don’t reward patience immediately.

They test it first.

The best opportunities:

• Don’t feel obvious

• Don’t come with certainty

• Don’t look comfortable

They come when:

• Quality is sold

• Narratives turn negative

• And valuations quietly reset

What Paid Members Get

Premium members receive:

• Two fully updated spreadsheets per month

• Ranked capital allocation tables

• 12-month expected return modelling

• Conviction tiers

• Ongoing valuation updates

For £200/year, this is built for investors who want to operate with a clear framework - not guesswork.

This is designed for investors who want:

• Structure

• Discipline

• Repeatable decision-making

Not noise.

If you’re serious about improving your decision-making, this is where to start.

April Spreadsheet Below

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Markets reward growth.

But they reward quality of growth even more.

And most investors don’t know the difference.

They focus on:

• revenue growth

• EPS beats

• headline numbers

All useful.

None sufficient.

Because none of them answer the question that actually matters:

Is this business structurally strong - or just temporarily growing?

That answer doesn’t sit in the headline numbers.

It sits in the income statement - and more importantly, how you read it.

Why Growth Alone Misleads

In strong markets, growth covers everything.

• weak margins get ignored

• inefficient businesses get rewarded

• capital discipline disappears

Because:

Growth creates the illusion of strength.

But margins reveal the truth.

And when conditions tighten, reality shows up fast.

Not gradually.

All at once.

Two companies can grow at the same rate:

same revenue
same narrative
same investor excitement

But produce completely different outcomes.

The difference is simple:

One converts growth into profit.
The other converts growth into cost.

The 10-Second Income Statement Test

If I only had a few seconds to assess a business, I’d look at one thing first:

Operating Margin Trend

Not the level.

The direction.

This is what strength looks like: margins expanding over time, not just revenue growing.

Simple framework:

• Expanding margins → strength

• Flat margins → stability (but limited upside)

• Declining margins → early warning sign

  ---

Why this matters:

Margins tell you what happens after growth.

Anyone can grow revenue.
Very few businesses can grow profitably - and sustain it.

Revenue Quality (Not All Growth Is Equal)

One of the biggest mistakes investors make:

Treating all revenue growth as the same.

It isn’t.

Ask three questions:

1. Is it organic?

• Or driven by acquisitions?

Growth through acquisition often looks strong…

…but comes with:

• integration risk

• higher costs

• lower visibility

  ---

2. Is it pricing or volume?

• Pricing power → strength

• Volume-driven growth → often cyclical

  

  This is pricing-led growth - strong in the short term, but harder to sustain than volume-driven expansion.

  ---

3. Is it durable?

• subscription / recurring → high quality

• one-off / project-based → less predictable

Adobe’s shift to subscription revenue created predictable, recurring growth - this is what durability looks like.

👉 Key idea:

Good businesses grow. Great businesses grow predictably.

Margins: Where the Truth Lives

Revenue tells you what a company sells.

Margins tell you how good the business actually is.

Break it down simply:

Gross Margin → Product Strength

• High = pricing power

• Low = commoditised / competitive

  

  High and rising gross margins like this typically signal pricing power - not commoditisation.

  ---

Operating Margin → Business Model

• Efficiency

• scalability

• cost discipline

  ---

Net Margin → Financial Structure

• interest costs

• tax

• capital decisions

  ---

But if you had to pick one?

👉 Operating margin tells you the most.

Because it reflects:

How well the business converts revenue into real operating profit.

When Growth Becomes a Problem

Here’s where most investors get caught:

Revenue is growing… but margins are falling.

This is the trap: growth looks strong - but the business is getting weaker.

This usually means:

• rising costs

• competitive pressure

• over-expansion

• weakening pricing power

  ---

And this is the key shift:

Growth stops being a tailwind…
and starts masking deterioration.

That’s when you see:

• earnings misses

• multiple compression

• sudden repricing

  ---

Not because the business collapsed.

But because:

The quality of growth was never there.

Earnings Quality (This Is Where It Gets Missed)

Even margins don’t tell the full story.

Because:

Earnings ≠ cash flow

A company can look profitable…

…but still not generate real cash.

Look for:

• stock-based compensation

• “adjusted” earnings

• one-off add-backs

• capitalised costs

  ---

👉 Key idea:

If earnings require explanation, they’re usually weaker than they look.

Connecting This to the Balance Sheet

This is where most investors stop.

And where mistakes happen.

The income statement tells you:

Is this business strong?

The balance sheet tells you:

Can it survive if it isn’t?

If you haven’t read it yet, this is the framework I use to assess risk in under 60 seconds:

You need both.

Because:

• strong margins with weak balance sheets → fragile

• strong balance sheets with weak margins → stagnant

But when both align:

You get durability and upside.

Bringing It Together

A strong business isn’t defined by growth.

It’s defined by alignment:

• high-quality revenue

• expanding (or stable) margins

• clean earnings

• resilient balance sheet

  ---

When all four are present:

The business compounds.

When they aren’t:

Growth becomes noise.

The Real Risk Isn’t Slow Growth

It’s misleading growth.

Because that’s what causes:

• overvaluation

• misplaced confidence

• permanent capital loss

  ---

A Better Way to Think About It

Most investors ask:

“How fast is this company growing?”

A better question is:

“How much of that growth actually turns into profit?”

Because that’s what drives:

• valuation

• durability

• long-term returns

  ---

How I Apply This in Practice

This is exactly why, in my monthly screens:

I don’t just look for:

• revenue growth

• or cheap valuations

Every company must show:

• strong or improving margins

• durable earnings

• and a resilient balance sheet

  ---

Because:

Upside without quality isn’t opportunity.
It’s risk.

What This Looks Like Right Now

In my latest screen:

• 119 companies analysed

• 30 passed initial filters

• a smaller group met my execution threshold

From those:

👉 Five stand out most clearly.

Not just because of upside -
but because downside is controlled.

👉 If you’re allocating real capital,
entry price matters.
downside matters.
and quality determines outcomes.

Unlock the Full Breakdown

🔒 Paid members get access to:

• Top 5 ranked stocks

• Exact buy ranges

• Downside modelling

• Full 30-stock dataset

• Allocation framework

  ---

  👉 Unlock the full report here

  ---

Final Thought

Growth gets attention.

Margins determine outcomes.

And over time:

The market rewards businesses that convert growth into profit - consistently.

Markets reward discipline.
Not growth. Not narratives. Not hype.

👉 If you found this valuable, consider subscribing to get the full monthly reports and future frameworks.

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Most dividend investors don’t underperform because they pick bad companies.

They underperform because they pick:

• stable businesses

• with decent yields

• at the wrong price…

• with the wrong balance sheet…

• and limited upside.

Over time, that combination quietly lags the S&P 500.

Over the last 20 years:

- The S&P 500 returned ~7.5% annually
- The average investor achieved just ~2.9%

That gap isn’t about access.

It’s about decision-making.

So the goal isn’t just to find “good dividend stocks”.

The goal is to find:

dividend stocks that compound capital AND income - while being mispriced today

That’s a very different filter.

In this article, I’ll walk through the full framework I use - the same one behind my recent screen:

Here’s the exact framework I use to find dividend stocks that can actually outperform the S&P 500 - not just provide income.

Over the last 12 months, applying this framework has consistently led me toward:

- Companies trading below historical valuation ranges
- Businesses with stronger balance sheets than peers
- Stocks with clear upside vs current expectations

In fact, in my latest screen:

119 stocks → 30 qualified → just 5 stood out.

That’s less than 5% of the market.

That’s the level of selectivity required to outperform.

Step 1: Start With Total Return - Not Yield

This is where most investors go wrong.

They optimise for:

• Yield

• Dividend history

• Stability

But the market doesn’t reward yield.

It rewards:

earnings growth + multiple expansion

Dividend is just a component of total return.

So the first question I always ask is:

👉 “Can this business outperform the S&P 500 from here?”

If the answer is unclear - I move on.

Step 2: Growth Drives Everything (Even for Dividend Stocks)

A dividend stock without growth becomes a bond proxy.

That means:

• Limited upside

• High sensitivity to rates

• Underperformance in strong markets

So I focus on:

What actually matters:

• 5–10Y revenue CAGR

• EPS growth consistency

• Margin expansion (or stability)

What I avoid:

• Flat revenue + “financial engineering” EPS

• Cyclical spikes mistaken for growth

Because over time:

growth is what drives both dividend increases AND valuation rerating

Step 3: Free Cash Flow Is the Truth

Earnings can be managed.

Cash flow is harder to fake.

Free cash flow tells you what a business actually generates after reinvestment.

It strips away accounting noise and shows:

- what’s real
- what’s sustainable
- and what can actually fund dividends

At a basic level:

This is why I always prioritise:

- consistent FCF generation
- strong FCF conversion (earnings → cash)
- and coverage of the dividend

Because when cash flow weakens, the dividend is usually next.

This is one of the biggest edges most investors ignore.

I look for:

• Consistent free cash flow generation

• FCF growing faster than dividends

• Low conversion risk (i.e. earnings ≈ cash)

Why this matters:

A company can:

• look cheap on P/E

• show a “safe” payout ratio

…but still be at risk if cash flow doesn’t support it.

This is exactly how dividend cuts catch people off guard.

Step 4: The Balance Sheet (This Is Where Most Investors Fail)

This is the part most investors underestimate - until it’s too late.

Two companies can look identical on valuation…

But have completely different risk profiles based on:

• Debt levels

• Refinancing timelines

• Interest coverage

• Liquidity

This is why I always stress:

The balance sheet matters more than valuation

I broke this down in detail here:

If you ignore this step, you’re not investing - you’re guessing.

Step 5: Dividend Safety ≠ Dividend Yield

High yield is often a warning sign, not an opportunity.

Instead, I focus on:

• FCF payout ratio (not earnings)

• Stability of the underlying business

• Capital allocation discipline

Because:

a growing 2–4% yield will outperform a declining 7% yield over time

This is what most investors underestimate.

It’s not the starting yield that matters -
it’s what that yield becomes over time.

The difference comes from:

- underlying business growth
- cash flow expansion
- and the ability to consistently increase the dividend

This is why I prioritise dividend safety and growth over headline yield.

Step 6: Valuation - The Actual Driver of Outperformance

This is where everything comes together.

Even the best companies underperform if you overpay.

So I compare:

• Forward P/E vs 5-year average

• FCF multiple vs historical range

• Current sentiment vs fundamentals

What I’m really looking for is:

valuation compression in high-quality businesses

This is what valuation compression looks like in practice.

A high-quality business…
trading well below its historical multiple.

Nothing about the business has fundamentally broken.

But sentiment has changed - and the multiple has compressed.

That’s where the opportunity comes from.

Because if the business continues to perform…
the valuation doesn’t need to expand much for strong returns.

That’s where asymmetry exists:

• downside protected by quality

• upside driven by rerating

Step 7: Expectations vs Reality (The Final Filter)

Stocks don’t move based on what is happening.

They move based on:

what changes vs expectations

So I always ask:

• What does the market expect today?

• What would need to go right for upside?

• What is already priced in?

This is where the edge comes from.

Putting It All Together

When a stock meets all of these criteria, you get:

• Growth

• Cash flow strength

• Balance sheet resilience

• Dividend safety

• Attractive valuation

• Mispriced expectations

That’s the combination that can:

outperform the S&P 500 - not just match it

So the real question is:

👉 Which dividend stocks actually pass all 7 filters today?

Because most don’t.

When I applied this framework across 119 stocks:

- Only 30 made it through
- Just 5 ranked highest for risk-adjusted upside

These aren’t just “good dividend stocks” -
they’re the ones where valuation, balance sheet, and expectations all align.

Instead of repeating the picks here, I’ve already broken that down in full detail.

Most investors won’t look this deep.

That’s where the edge comes from.

If you want to find dividend stocks that can actually outperform the market - not just generate income - that’s exactly what I focus on inside the paid newsletter.

Each month, I break down:

- The few stocks that actually pass this framework
- Where the market is mispricing risk vs upside
- Which opportunities I have the highest conviction in

You don’t need more stock ideas.

You need a better way to filter them.

That’s what this gives you.

Most investors don’t underperform because they lack access.

They underperform because they lack a framework.

This is mine.

What you get as a paid subscriber:

• Monthly stock screens (like this one)

• Full valuation models (DCF + comps)

• Buy / Hold / Avoid ratings

• Positioning + conviction levels

  ---

If this helped you, share it:

If you found this framework useful, feel free to share it with others:

👉 Share this post
👉 Forward to a friend

It helps more than you think.

Markets reward discipline.

But most investors spend their time in the wrong place.

They focus on:

• valuation multiples

• growth rates

• analyst price targets

All useful.

None sufficient.

Because none of them answer the one question that ultimately matters:

Can this business withstand pressure?

That answer doesn’t sit in the income statement.

It sits on the balance sheet.

And most investors only realise that when it’s too late.

By then, the damage is already done.

Why This Only Shows Up When It’s Too Late

In strong markets, balance sheets are largely ignored.

• credit is cheap

• liquidity is abundant

• refinancing is easy

Weakness doesn’t disappear.

It just gets delayed.

But when conditions tighten, the difference between companies becomes obvious very quickly.

Not gradually.

All at once.

Two businesses can look identical on the surface:

• similar growth

• similar margins

• similar valuation

But produce completely different outcomes.

The difference is rarely the business model.

It’s this:

One has flexibility. The other has constraints.

---

The 10-Second Balance Sheet Test

If I only had a few seconds to assess a company’s financial strength, I would start with one metric:

Net Debt relative to earnings power

In simple terms:

After accounting for cash, how many years of earnings would it take to repay the debt?

This is typically measured as:

Net Debt / EBITDA

How to Use It

Start with:

Total Debt – Cash = Net Debt

Then compare it to earnings.

As a rough framework:

• < 1x → structurally strong

• 1–3x → manageable

• 3–5x → increasingly dependent on stable execution

• 5x+ → vulnerable to disruption

  ---

What This Looks Like in Practice

At the lower end of the spectrum (<1x Net Debt / EBITDA), you’ll typically find businesses with:

• strong free cash flow generation

• high margins

• and minimal reliance on external financing

Examples often include:

• large-cap technology companies with net cash positions

• asset-light software platforms

• and certain high-quality compounders

These businesses don’t just survive downturns.

They operate from a position of strength.

They don’t need capital markets.

That’s the key difference.

But This Is Only the Starting Point

One of the biggest mistakes investors make is reducing balance sheet analysis to a single ratio.

Net Debt / EBITDA is useful.

But it doesn’t tell the full story.

A proper assessment looks at three things:

1. Liquidity (Short-Term Survival)

Before anything else, ask:

Can this business meet its obligations over the next 12–24 months?

Simple framework: liquidity determines whether a company can survive short-term stress.

This is where most problems start.

Look at:

• cash

• short-term assets

• vs short-term liabilities

A company can be “cheap” and still run into trouble if liquidity is weak.

Because:

• refinancing may be required

• capital may need to be raised

• or assets may need to be sold

  ---

Simple signal:

• Strong liquidity → flexibility

• Weak liquidity → dependence

And dependence is risk.

2. Debt Structure (When does the risk actually show up?)

Not all debt is equal.

What matters is:

When it needs to be repaid.

Two companies with identical leverage can have very different risk profiles.

One might have:

• long-dated debt

• fixed rates

• minimal near-term refinancing

The other might have:

• near-term maturities

• floating-rate exposure

• refinancing risk

  ---

💡 Key insight:

Most investors don’t get into trouble because a company has debt.

They get into trouble because that debt becomes relevant at the wrong time.

---

3. Cash Flow vs Earnings (Can the company actually handle it?)

EBITDA is useful.

But it isn’t cash.

What matters is:

How much real cash the business generates after everything else.

Look at:

• free cash flow

• capital intensity

• consistency of cash generation

Because:

A company can look profitable on paper…

…but still struggle to manage its obligations in reality.

Bringing It Together

A strong balance sheet isn’t defined by one number.

It’s defined by alignment.

A strong balance sheet creates flexibility.
A weak one creates constraints.

It’s defined by alignment:

• manageable leverage

• strong liquidity

• predictable cash flow

• sensible debt structure

When all four are present:

The business has flexibility

When they aren’t:

The business becomes fragile

---

The Real Risk Isn’t Debt — It’s Fragility

Debt doesn’t kill businesses.

Fragility does.

Leverage simply exposes it.

When flexibility disappears:

• small problems become big problems

• refinancing becomes expensive

• optionality disappears

That’s when you see:

• dilution

• dividend cuts

• forced decisions

• permanent repricing

  ---

A Better Way to Think About Risk

Most investors ask:

“Is this stock cheap?”

A better question — and the one that actually matters — is:

“What happens if things go slightly wrong?”

Because if the balance sheet is strong:

• time is on your side

• the company can adapt

• valuation tends to recover

If it isn’t:

• time works against you

• and downside compounds

  ---

Why This Matters Right Now

Over the past few weeks, markets have repriced risk quickly.

Across multiple sectors, large-cap companies have seen meaningful pullbacks.

That creates opportunity.

But also risk.

Because:

Not all drawdowns are mispricings.

Some are opportunities.

Others are early warnings.

The balance sheet is often what separates the two.

How I Apply This in Practice

This is exactly why, in my monthly screens, I don’t just look for upside.

Every company in my screen passes this balance sheet framework before valuation is even considered.

I filter for companies where:

• valuation is attractive

• earnings are durable

• and the balance sheet provides flexibility

Because:

Upside without durability isn’t opportunity. It’s leverage disguised as value.

---

What This Looks Like in the Current Market

In my latest report:

• 119 companies were screened

• 30 qualified based on strict criteria

• A smaller group met my execution threshold

From those, five stand out most clearly.

Not just because of upside.

But because:

• downside is defined

• balance sheets are resilient

• and risk/reward is asymmetric

  ---

Unlock the Full Breakdown

🔒 Paid members get access to:

• The Top 5 ranked stocks this month

• Exact buy ranges

• Downside modelling

• The full 30-stock screening dataset

• Allocation framework

If you’re allocating real capital:

Entry price and downside matter just as much as upside.

---

Final Thought

Most investors focus on what can go right.

The balance sheet tells you what can go wrong.

And over time:

Avoiding permanent losses matters more than capturing every opportunity.

Markets reward discipline.
Not optimism. Not narratives. Not hope.

👉 If you found this valuable, consider sharing or upgrading to access the full monthly reports.

Markets have repriced risk quickly over the past few weeks.

Across technology, financials, and consumer sectors, several large-cap companies have seen double-digit pullbacks, pushing valuations back toward levels not seen in years.

For long-term investors, that type of reset matters.

Not because falling prices are inherently attractive - but because valuation compression often creates opportunity when underlying business fundamentals remain intact.

Large-cap companies rarely offer both durable earnings power and meaningful upside at the same time.

This month, several do.

Rather than focusing on macro headlines, this report focuses on something more actionable:

Where valuation and fundamentals have temporarily diverged.

When expectations reset faster than earnings power, risk/reward can shift materially in favor of disciplined investors.

🔎 This Month’s Screening Framework

To identify those situations, I screened the market for large-cap companies showing meaningful upside potential.

Each company had to meet the following criteria:

• Market capitalization above $10B
• Minimum 20% projected 12-month upside
• Analyst consensus of Moderate Buy or Strong Buy
• Durable underlying fundamentals and cash flow

After applying those filters, 119 companies were screened.

From those, 30 companies qualified.

That number alone highlights something important:

Meaningful upside opportunities rarely appear broadly across large-cap markets at the same time.

What stands out this month is how many companies are now trading near multi-year valuation compression despite relatively stable earnings expectations.

Market selloffs tend to be broad.

But mispricing is rarely evenly distributed.

Some companies fall because fundamentals weaken.

Others fall simply because investor sentiment resets faster than the business itself.

Those are the opportunities this report aims to identify.

📊 March at a Glance

Companies screened: 119

Final qualifying stocks: 30

Minimum projected upside: 20%

Focus: Large-cap companies ($10B+)

Objective:

Identify asymmetric setups where valuation compression meets durable fundamentals.

From the 30 qualifying names, a smaller group meets my personal execution threshold based on:

• valuation support
• business durability
• analyst alignment
• risk-adjusted upside

Five stand out most clearly.

They are ranked based on:

• Upside potential
• Business quality
• Valuation compression
• Downside support levels

The companies below represent the clearest opportunities currently screening in the market.

🏆 This Month’s Top 5 High-Upside Stocks

#5 — Microsoft (MSFT)

Microsoft rarely screens as a high-upside opportunity.

This month, it does.

Shares have pulled back alongside broader technology stocks as investors reassess the scale of AI infrastructure spending across the industry.

That reset has pushed the forward valuation closer to the lower end of its historical range - despite Microsoft continuing to generate exceptional free cash flow.

What the Market Is Pricing In

At current levels, investors appear to be pricing:

• Slower Azure growth normalization
• Elevated AI capital expenditures
• Margin stabilization rather than expansion

Those concerns are reasonable in the short term.

But they do not suggest structural impairment.

Microsoft remains one of the most dominant enterprise platforms in the world, with durable revenue streams across:

• cloud infrastructure
• enterprise software
• productivity ecosystems

Valuation Context

The forward P/E now sits near the lower end of its historical range.

Under normalized growth assumptions, that creates a much more attractive entry point than investors have seen in recent years.

Microsoft ranks #5 this month.

Most selections from February’s report have already outperformed the S&P 500 despite broader market weakness - highlighting how quickly sentiment can reverse when valuations reset.