Daniel Pronk

Caution on Netflix Over High Multiples Despite Strong Earnings

"Let's now move on to Netflix stock because Netflix has been getting hit pretty hard in the market today. Their revenue grew 17% which was in line with guidance, but the operating margin was below expectation due to a Brazilian tax dispute. Despite strong earnings in revenue, margins and free cash flow, Netflix is trading at about 50 times cash flow. That high multiple makes the stock very expensive in my opinion and is the main reason I do not like buying it."

The speaker provides commentary on Netflix, noting that even though the company reported strong revenue growth and margin expansion, its high valuation at 50x free cash flow renders it expensive. He attributes the recent sell-off partly to a one-time tax expense and argues that the lofty multiples make Netflix a less attractive buy.

Buying Opportunity in Constellation Software at a Lower Multiple

"Constellation Software is in a very large correction right now. It s actually the largest correction the stock has ever been in and down roughly 30% from its all-time highs. I was waiting for a better opportunity. And I believe that a 22 multiple for a business that has such a great track record of growing 20% plus is very fair. I am happy to be a buyer of Constellation Software. Once again, that's my first time in 3 years buying this stock."

The speaker explains that Constellation Software, currently in its largest correction and trading at a 22x free cash flow multiple, now offers an attractive entry point. He highlights its consistent revenue and cash flow growth, alongside strong capital allocation and management incentives.

Aggressive Buying of Marcato Libre Amid Correction

+0.48%current return

"And the first stock that I want to discuss that I am actively buying is Marcato Libre. ... So, for all of those reasons, I have continued to buy more Marcato Libre. And I believe that this is actually the number one stock that I have continued to add to my portfolio over the past month. And as the stock has fallen, I have been getting more and more aggressive. If the stock does see any weakness after earnings, and I'm actually kind of expecting it to, then I will be looking to add to my position even more."

The speaker discusses his active buying of Marcato Libre, emphasizing that its current 20% correction, driven by competitive and political concerns, presents an attractive buying opportunity. He highlights the company s history of using lower free shipping thresholds to spur growth and deepening its competitive moat.