Summary
Highlights
The video starts by acknowledging October as the beginning of the final quarter of the year. It highlights the surprising strong performance of many stocks in September, a historically challenging month for the market. The speaker introduces four specific stocks that might not have seen significant upside movement recently, suggesting they offer better value.
MercadoLibre, a $110.3 billion company, has outperformed the market year-to-date despite a recent 14% drawdown. While its P/E and P/S ratios appear high, the stock has historically traded at a premium due to its incredible growth, strong management, and high-margin business model. The company expects top and bottom-line growth above 30% compounded. Recent challenges include Amazon waiving fees in Brazil, a direct challenge to MercadoLibre, and potential macroeconomic impacts from Argentina's economic situation and US-China geopolitical tensions. However, MercadoLibre has a track record of overcoming such challenges, and an analyst from Morgan Stanley reiterated an 'overweight' rating with a $2,850 price target, viewing the recent dip as a buying opportunity for a long-term compounder.
DLocal is a smaller company valued at $4.1 billion, currently trading at a trailing P/E of 29.3x and a forward P/E of 19.5x. Despite being up 20.3% year-to-date and 63.2% over the last 12 months, it's still down 33.8% over the past three years. DLocal operates in emerging markets across Africa, the Middle East, and Latin America. Its non-LATAM segments now represent nearly a quarter of its business and are growing faster, reducing market dependency. While gross profit margins have decreased due to revenue growing faster than gross profit, total payment volume (TPV) growth has consistently offset take rate compression. The company boasts remarkable revenue growth of 51.5% CAGR over the last 5-6 years, with rapid EPS and operating income growth expected. The CEO, Pedro Arnt, previously CFO of MercadoLibre, is highlighted as a key reason for optimism. The stock recently dropped due to a secondary offering but has shown signs of recovery.
SoFi is a significant position for the speaker, with a market cap of $30.8 billion. The stock recently dipped due to an incorrect report about delinquencies from Upstart. The speaker believes current growth projections for SoFi are low and expects the company to comfortably beat expectations, especially for its 2026 EPS targets. SoFi is aiming to be a one-stop shop for financial services, with the introduction of Level 1 options and the return of crypto to the platform. The speaker sees significant tailwinds and believes SoFi could become a $100 billion business in the future. He considers adding more shares if the stock drops to around the $20 mark, especially with quarterly earnings approaching rapidly at the end of October.
Adobe is presented as a potential value or recovery play, despite the speaker not personally owning it. The stock has underperformed, down 26.6% over the last five years and 20% year-to-date, due to market concerns about AI's threat to its business. However, Adobe, valued at $143 billion, maintains impressive margin profiles across all metrics (gross, EBITDA, operating, net, free cash flow). It is still expected to grow revenue and EPS in low double digits. The company reported record revenue and significant growth in its digital media and digital experience segments. Adobe's AI strategy is yielding results, with AI-influenced annual recurring revenue surpassing $5 billion and new AI-first products exceeding their full-year target ahead of schedule. The speaker argues that no cracks are visible in Adobe's business fundamentals, revenue, profitability, or free cash flow, and sustained share buybacks further benefit long-term investors.