10-31-2021, 12:05 PM
Why tech stocks are still undervalued despite the 20 year bull-run.
<!-- SC_OFF --><div class="md"><p>“Microsoft, US$2.2T market cap, annualised revenue $185B, up 21% over the year, annualised profits $66B, up 47% over the year.</p> <p>I.e. Microsoft shareholders are getting a 3% yield ($66B/$2.2T) - with ~21% (and arguably 47%) growth. So if Microsoft just continues to grow as it's doing - and has been doing in recent years - we're talking a ~24% (3%+21%) net return. Sure, I'm simplifying, but fundamentally this makes sense.</p> <p>This is INSANELY good especially when considering nearly half of Microsoft's revenue is recurring. I mean, if you were buying real estate with a 4% rental return, that'd end up around 2.5% net, you'd be very lucky to be getting 5% capital growth. That's a 7.5% (2.5% + 5%) net return at best. A 20% annualised return is what Warren Buffett, the world's best investor, used to consistently achieve in his heyday.</p> <p><strong>Microsoft is no-brainer cheap, you should go ahead and buy. But it's not just Microsoft - all of GAFAM - Google, Apple, Facebook, Amazon, Microsoft - which have a total market cap of $9T and up more than 10x over the last decade - do similarly well with the same basic analysis.</strong></p> <p>How can this possibly be?</p> <p>Ok, let's step back a bit, GAFAM, just 5 stocks, represent nearly 20% of the value of ALL listed companies in the US, up from 3% a decade ago. Think about that. Add other tech stocks to that and you have a monumental shift in the composition of US stocks. That needs a monumental shift in capital which needs investors to change their way of thinking. I mean, we're going through a real paradigm shift.</p> <p>Now, sure, that shift is happening, we're all living it, but the world of finance, much of it controlled by older people fairly uncomfortable with technology, is going to lag - and this lag is the core reason why far from being some bubble, tech stocks in general are, despite their soaring valuations, still massively undervalued.”</p> <ul> <li>Asim Qureshi, ex-Morgan Stanley VP</li> </ul> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Okmanl"> /u/Okmanl </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/qjf35m/why_tech_stocks_are_still_undervalued_despite_the/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/qjf35m/why_tech_stocks_are_still_undervalued_despite_the/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>“Microsoft, US$2.2T market cap, annualised revenue $185B, up 21% over the year, annualised profits $66B, up 47% over the year.</p> <p>I.e. Microsoft shareholders are getting a 3% yield ($66B/$2.2T) - with ~21% (and arguably 47%) growth. So if Microsoft just continues to grow as it's doing - and has been doing in recent years - we're talking a ~24% (3%+21%) net return. Sure, I'm simplifying, but fundamentally this makes sense.</p> <p>This is INSANELY good especially when considering nearly half of Microsoft's revenue is recurring. I mean, if you were buying real estate with a 4% rental return, that'd end up around 2.5% net, you'd be very lucky to be getting 5% capital growth. That's a 7.5% (2.5% + 5%) net return at best. A 20% annualised return is what Warren Buffett, the world's best investor, used to consistently achieve in his heyday.</p> <p><strong>Microsoft is no-brainer cheap, you should go ahead and buy. But it's not just Microsoft - all of GAFAM - Google, Apple, Facebook, Amazon, Microsoft - which have a total market cap of $9T and up more than 10x over the last decade - do similarly well with the same basic analysis.</strong></p> <p>How can this possibly be?</p> <p>Ok, let's step back a bit, GAFAM, just 5 stocks, represent nearly 20% of the value of ALL listed companies in the US, up from 3% a decade ago. Think about that. Add other tech stocks to that and you have a monumental shift in the composition of US stocks. That needs a monumental shift in capital which needs investors to change their way of thinking. I mean, we're going through a real paradigm shift.</p> <p>Now, sure, that shift is happening, we're all living it, but the world of finance, much of it controlled by older people fairly uncomfortable with technology, is going to lag - and this lag is the core reason why far from being some bubble, tech stocks in general are, despite their soaring valuations, still massively undervalued.”</p> <ul> <li>Asim Qureshi, ex-Morgan Stanley VP</li> </ul> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/Okmanl"> /u/Okmanl </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/qjf35m/why_tech_stocks_are_still_undervalued_despite_the/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/qjf35m/why_tech_stocks_are_still_undervalued_despite_the/">[comments]</a></span>Kind Regards R