Meta Platforms, Inc. (META)

You have to look at the future when buying this company today. It isn’t cheap on earnings, but he doesn’t know any company that has perfect balance sheets like this has. Growing revenues and earnings by 40% per year. They are thinking multitudes in different lines and operations, and he is excited to see what this does. It’s the world’s greatest network. The acquisition of Instagram is now paying off dramatically. This has a place in your portfolio. You may even want to own Google (GOOGL-Q) at the same time.

(A Top Pick April 19/17. Up 26%.) He continues to like this. All lights are green. $200 billion of advertising has moved from TV to Facebook. Only trading at 27X earnings.

(Market Call Minute.) This is growing very, very rapidly. Even though this is a mammoth company with over 2 billion active monthly users, they grew revenues 47% year-over-year last quarter.

Mark Zuckerberg seems less concerned with expenses rising in the short term. When they went public, they had zero mobile advertising revenue, and in the last quarter about 80% of their revenue was from mobile advertising. They and Google (GOOG-Q) own that market. They've monetized their base fantastically. Still a good, long term hold.

This is part of that group which has been kind of driving the market. The stock has been in an uptrend, but has had normal corrections. From 2017, there have been very few corrections, so it has been relatively un-volatile, which is not healthy. You are going to get some kind of pullback sooner or later. If you do get a 5%-10% pullback, then you buy this.

If they can get advertising through video right, then the stock can go higher, and they can get room for growth. It is hard to bet against a visionary like Zuckerberg. The company and the stock can grow higher, but what is the right valuation to pay for it? At 30X earnings right now, it could be a bit too rich.

He likes this because it is involved in a couple of oligopolies, and in some cases duopolies. With all the accounts it has, there are increased users. What is most interesting is its dominance in online advertising. They are in a duopoly with Alphabet (GOOGL-Q), and control about 75% of online advertising. A really good business. If the valuation pulled back and got a little more compelling, he would consider adding to it.

The world’s best advertising medium. If you look at the product online, they follow you around. They know what you like, who your friends are, what you are wearing. There are even some rumours they can listen in on your phone when you are talking. They and Google (GOOGL-Q) capture only a small amount of the world advertising market, so there is a long runway of growth. (Analysts’ price target is $200.)

There is no seasonal because there are not 20 years of data. It tends to move higher in September, dip into October and run higher into December.

Which FAANG stock would you choose? As a value investor, he wouldn’t touch any of them. It looks like they have peaked as money is moving out of them temporarily, into more cyclical stocks, financials and even energy stocks for now. Because of that, he wouldn’t own any right now. If he had to pick one, this one seems to really dominate what they do.

This has a lot of runway in front of it. It has appreciated very quickly from a price standpoint, but valuation metrics have become more compelling. For that to happen, it means the fundamentals have risen at a faster pace than the price. They’ve made a very good inroad into artificial intelligence. Their product, Oculus is going to be very important for them. Instagram is doing extremely well.

$1,000 in 5-10 years?An ROE over the long-term should also predict the movement of the stock price. For example, if a company has an ROE of 20%, they are increasing the value of the shareholder equity by 20% a year. 20% compounded over a ten-year period actually leads to a fivefold increase in the equity which, theoretically, should also lead to a fivefold increase in the stock price. If you were to multiply the current stock price of this by 5, that gets you relatively close to $1000. However, he doesn’t think it gets to $1000 over the next 5 years, but if they are able to achieve those ROE’s that they have in the past, it wouldn’t shock him. Thinks their runway for growth is long and very good.

(A Top Pick April 6/17. Up 22%.) They are doing everything right. They are still only 5% of global ads spending. Phenomenal ad growth and have a long way to go. Had a great run, but definitely have more avenues to continue to grow on.

(Top Pick Sep 19/16, Up 34%) The price per ad they got was up 24% even if the growth rate was down to 19%. It has run up a lot and is probably due for a pull back. It is a near term hold and long term buy.

He loves this. It had an amazing quarter. An amazing growth story. The moat of the network affect is unbelievable. It is everywhere. It breaks all languages and all countries. Everybody uses it. There is accelerating growth in terms of new users. Trading at 27X forward earnings, which is actually not insane. If you back out all the cash that it has and the cash it is going to generate, you can get to a more reasonable, comfortable level. If there is a pullback, he would look to buy more.