Meta Platforms, Inc. (META)

Another great opportunity. 6.3B monthly active users. 45% penetration. Swinging away from software to hardware. No dividend. (Analysts’ price target is $280.14)

(A Top Pick Jun 21/21, Down 51%) It was at a reasonable valuation a year ago and is now undervalued, trading at 14X this year's earnings and 12X next year's earnings. There is an advertising revenue concern. It is investing more in AI machine learning and connecting subscribers to e-commerce services but this will take a while. Lots of cash flow and is a buy.

options Options expire this Friday. The name change hasn't helped. Today, the market is buying the $155 puts. The stock was at $164 at the time. He's in the puts.

Couldn't see the business plan as clearly as he needed to, moving from traditional businesses to the metaverse. He couldn't see the sustained growth rates he needed.

Allan Tong’s Discover Picks Overall, the quarter was mixed, though investors perked up on the daily active users numbers and the EPS beat of $2.72 above $2.56. The market bumped the stock from $174.95 to $205.73 the day after that report. Meta is out of the dog house, and is attractive at a 15x valuation. However, it will be investing in the metaverse through 2030. Reality Labs, its VR research and development arm, suffered $2.96 billion in losses in Q1 compared to $1.83 billion the previous year. (Meta will lower operating expenses this year, though.) It's too early to tell whether the metaverse will pay off or what it will even be. In the meantime, investors should keep in mind that Meta is a cash cow with an ad-driven business model generating $30 billion annually at a free cash flow yield of 11%. Sure, many governments hate Meta/Facebook, but it hasn't stopped people from using it. Read Are tech stocks alive? for our full analysis.

(A Top Pick May 12/21, Down 40%) Guidance predicted difficulties going forward. High multiple stock that fell. 16x earnings, below intrinsic value. He'd buy here. EBITDA margins between 45-50%, great balance sheet, lots of cash. Second largest player in digital ads. Lots of chances for monetization. Major headwind is inability to buy anything big. Organic growth is quite nice.

It has had issues in the news that have kept the stock price inexpensive - now undervalued. It is spending a lot of money on the Metaverse. He is not adding because he is unsure of the upside. Advertising revenue is very important so limited growth ahead. Also limited because of size.

(A Top Pick May 04/20, Down 3%) It is facing a lot of competition. Growth is slowing to a more normal rate which bothers investors. It is a very good value at 12 or 13 times earnings with a great balance sheet.

Meta has been decimated by Apple's policies. And they're in an investing mood, so there's less cash. Also, the consumer is living paycheque to paycheque where costs have outpaced wage raises.

The tech companies' growth rate has not slowed, but their PEs have been slashed to anticipate a slowdown which hasn't happened yet. E-commerce around the world hasn't happened yet. His portfolio is enjoying the best cash flow ever--the America consumer is on fire like never before. He likes it that people think the world is ending, because this is the time to buy. Zero chance of a recession this year. We're not seeing another dotcom bubble. Meta's cash flows haven't changed at all and he doesn't see that happening. Yet, shares have been crushed by half. Meta is the best example of tech being oversold and being on sale. It offers growth. No slowdown here.

(A Top Pick May 25/21, Down 36%) He sold it. Troubled times with more than its share of challenges. They were losing share to TikTok. Meta's Reels is trying to catch up. The company changed its name to Meta to transition to the metaverse. They may succeed, but it will take years and cost a lot.