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HERE'S THE 5 STOCKS TO WATCH FOR 2025

NVIDIA

NVIDIA was founded in 1993 by Jensen Huang, Chris Malachowsky, and Curtis Priem to revolutionize graphics computing. It gained prominence in the late 1990s with its GeForce GPUs, which became essential for gaming and professional visualization. Over time, NVIDIA expanded into AI, data centers, and autonomous driving, leveraging its powerful GPUs for machine learning and high-performance computing. The company's breakthrough in AI and deep learning has made it a dominant force in cloud computing and AI research. Today, NVIDIA is a leader in GPU technology, driving innovation in gaming, AI, and autonomous systems.NVIDIA is a leading technology company renowned for designing and selling advanced graphics processing units (GPUs) and related technologies. The company's business model is centered around two primary segments: Graphics, and Compute & Networking.1. Graphics Segment:This segment focuses on delivering high-performance GPUs and related products for various applications:Gaming: NVIDIA's GeForce GPUs are widely used by gamers to enhance gaming experiences with superior graphics and performance.Professional Visualization: This includes Quadro GPUs designed for professionals in fields like design, animation, and scientific research, providing advanced visualization capabilities.2. Compute & Networking Segment:This segment encompasses products and services that cater to high-performance computing and networking needs:Data Center: NVIDIA provides GPUs and related technologies for data centers, supporting applications such as artificial intelligence (AI), machine learning, and data analytics.Automotive: The company offers platforms for autonomous vehicles, including hardware and software solutions that enable self-driving capabilities.In terms of revenue distribution, the Compute & Networking segment has become the dominant contributor to NVIDIA's financial performance. In the fiscal year 2024, the company reported total revenues of approximately $60.92 billion, with the Compute & Networking segment accounting for $47.4 billion (77.8%), and the Graphics segment contributing $13.52 billion (22.2%).This significant growth in the Compute & Networking segment is largely driven by the increasing demand for AI and machine learning applications, particularly in data centers. NVIDIA's GPUs have become integral to these advanced computational tasks, leading to substantial revenue growth in this area.Overall, NVIDIA's strategic focus on high-performance computing and AI has positioned it as a key player in the technology industry, with its Compute & Networking segment leading its revenue generation.

NVIDIA DCF STOCK ANALYSIS. BUY OR SELL.

Today I’ll make a stock analysis based on the Discounted Cash Flow Model.Here’s my assumptions:Risk Free Rate (10 Years Interest Rate Swap): 4.357%Risk Premium (Taken from the Aswath Damodaran equity premium spreadsheet): 4.6%Interest Rate Spread on The Risk free rate ( For the cost of debt calculation): 4%HISTORICAL DATA
Revenue growth in the last 10 years (CAGR): 33%Earnings growth in the last 10 years (CAGR): 53.45%Unlevered Free Cash Flow growth in the last 10 years (CAGR): 49.29%FUTURE ASSUMPTIONS
End of Year FCF growth: 40%Growth until end of 2027: 40%Growth until end of 2034: 30%Perpetual growth: 3.2%Net Debt: -28.262B (POSITIVE)Restricted Stock Units Present Value Assumption: 40.964BStock Valuation based on these assumptions: $215Last update: 02/13/2025

LOCKHEED MARTIN

Lockheed Martin is a leading global aerospace and defense company specializing in the research, design, development, manufacture, integration, and sustainment of advanced technology systems, products, and services. The company's business model is structured around four main segments:1. Aeronautics:This segment focuses on the development and production of military aircraft, including renowned platforms such as the F-35 Lightning II, F-22 Raptor, and C-130 Hercules. In 2023, Aeronautics generated approximately $27 billion in net sales, accounting for about 40% of Lockheed Martin's total revenue.2. Rotary and Mission Systems (RMS):RMS encompasses the design and manufacture of military and commercial helicopters, naval systems, radar systems, and cybersecurity solutions. In 2023, this segment reported net sales of around $16 billion, contributing significantly to the company's overall revenue.3. Missiles and Fire Control (MFC):MFC is responsible for the development and production of advanced missile systems, fire control systems, and related technologies. In 2023, this segment achieved net sales of approximately $11 billion.4. Space:The Space segment focuses on the development of satellites, space transportation systems, and strategic missile systems. In 2023, it generated net sales of about $12.6 billion.Overall, Lockheed Martin's diversified portfolio across these segments enables the company to maintain a balanced and steady revenue flow, primarily through contracts with government bodies, particularly the United States Department of Defense. The company utilizes various contract types, including fixed-price, cost-plus, and time-and-materials contracts, to ensure financial stability.In 2024, Lockheed Martin reported total net sales of $71.0 billion, reflecting a 5% increase from the previous year.This strategic segmentation allows Lockheed Martin to effectively address a wide range of defense and aerospace needs, reinforcing its position as a leader in the industry.Lockheed Martin is the largest defense contractor in the US. This makes it a company of strategic importance. Nonetheless, change can come in this sector as well and the rise of companies such as Anduril is the proof. Lockheed, just as many other large companies in the same sector, has faced criticism from parts of the US government for not being cost-efficient and not being able to deliver enough equipment as requested.

LOCKHEED MARTIN DCF STOCK ANALYSIS. BUY OR SELL.

Today I’ll make a stock analysis based on the Discounted Cash Flow Model.Here’s my assumptions:Risk Free Rate (10 Years Interest Rate Swap): 4.357%Risk Premium (Taken from the Aswath Damodaran equity premium spreadsheet): 4.6%Interest Rate Spread on The Risk free rate ( For the cost of debt calculation): 4%HISTORICAL DATA
Revenue growth in the last 10 years (CAGR): 6%Earnings growth in the last 10 years (CAGR): 7.48%Unlevered Free Cash Flow growth in the last 10 years (CAGR): 7.42%FUTURE ASSUMPTIONS
End of Year FCF growth: 5%Growth until end of 2027: 6%Growth until end of 2034: 5%Perpetual growth: 3%Net Debt: 16.170BRestricted Stock Units Present Value Assumption: 0.498BStock Valuation based on these assumptions: $693Last update: 02/13/2025

HUNTINGTON INGALLS INDUSTRIES

Huntington Ingalls Industries (HII) is the largest military shipbuilding company in the United States, specializing in the design, construction, and maintenance of naval ships. The company's business model is structured around three primary segments:1. Ingalls Shipbuilding:Located in Pascagoula, Mississippi, this segment focuses on building a variety of non-nuclear ships for the U.S. Navy and Coast Guard, including amphibious assault ships, destroyers, and cutters. In 2023, Ingalls Shipbuilding reported revenues of $2.8 billion, accounting for approximately 24% of HII's total revenue.2. Newport News Shipbuilding:Based in Newport News, Virginia, this segment is the sole designer and builder of nuclear-powered aircraft carriers and one of two providers of nuclear-powered submarines for the U.S. Navy. In 2023, Newport News Shipbuilding generated revenues of $6.1 billion, representing about 53% of the company's total revenue.3. Mission Technologies:This segment offers a range of services, including defense and federal solutions, unmanned systems, and nuclear and environmental services. In 2023, Mission Technologies achieved revenues of $2.6 billion, contributing roughly 23% to HII's overall revenue.Overall, HII's diversified portfolio across these segments enables the company to effectively meet the complex needs of the U.S. Department of Defense and other government agencies, maintaining its position as a key player in the defense industry.HII has been preforming very badly in the last few years but what makes me interested in this company is the fact that the US needs a capable shipbuilding industry in order to pursue its strategic objectives. China is building ships at a very fast pace, therefore the US cannot afford to step back and will surely try to push for more production on American land and HII will probably be part of it.

HUNTINGTON INGALLS INDUSTRIES DCF STOCK ANALYSIS. BUY OR SELL.

Today I’ll make a stock analysis based on the Discounted Cash Flow Model.Here’s my assumptions:Risk Free Rate (10 Years Interest Rate Swap): 4.357%Risk Premium (Taken from the Aswath Damodaran equity premium spreadsheet): 4.6%Interest Rate Spread on The Risk free rate ( For the cost of debt calculation): 4%HISTORICAL DATA
Revenue growth in the last 10 years (CAGR): 5.7%Earnings growth in the last 10 years (CAGR): 8.09%Unlevered Free Cash Flow growth in the last 10 years (CAGR): -15.02%FUTURE ASSUMPTIONS
End of Year FCF growth: 50%Growth until end of 2027: 20%Growth until end of 2034: 4%Perpetual growth: 3.1%Net Debt: 2.870BRestricted Stock Units Present Value Assumption: 0.089BStock Valuation based on these assumptions: $126Last update: 02/13/2025

PALANTIR

Palantir Technologies is a software company specializing in big data analytics, offering platforms that integrate, manage, and analyze vast datasets for decision-making across various sectors. The company's business model is structured around two primary segments:1. Government Segment:Palantir provides data integration and analytics solutions to government agencies, focusing on defense, intelligence, and law enforcement. In 2023, the government segment accounted for approximately 54.9% of Palantir's total revenue, generating around $1.2 billion.2. Commercial Segment:This segment serves private sector clients across industries such as finance, healthcare, and manufacturing, offering platforms like Palantir Foundry for data-driven decision-making. In 2023, the commercial segment contributed about 45.1% of the company's revenue, amounting to approximately $1 billion.Palantir's diversified portfolio across these segments enables the company to effectively meet the complex data analytics needs of both government and commercial clients, maintaining its position as a key player in the data analytics industry.

PALANTIR DCF STOCK ANALYSIS. BUY OR SELL

Today I’ll make a stock analysis based on the Discounted Cash Flow Model.Here’s my assumptions:Risk Free Rate (10 Years Interest Rate Swap): 4.357%Risk Premium (Taken from the Aswath Damodaran equity premium spreadsheet): 4.6%Interest Rate Spread on The Risk free rate ( For the cost of debt calculation): 1%HISTORICAL DATA
Revenue growth in the last 5 years (CAGR): 30.17%Earnings growth in the last 5 years (CAGR): From negative (-580M) to positive (462.2M as of the last TTM earnings)Unlevered Free Cash Flow growth in the last 5 years (CAGR): 82.01%FUTURE ASSUMPTIONS
End of Year FCF growth: 80%Growth until end of 2026: 50%Growth until end of 2034: 50%Perpetual growth: 3.5%Net Debt: -4.990B (POSITIVE)Options Present Value Assumption: 24.190BRestricted Stock Units Present Value Assumption: 8.183BStock Valuation based on these assumptions: $155Last update 02/13/2025

VISA

Visa Inc. operates a global payments network, facilitating electronic transactions among consumers, merchants, financial institutions, and governments. The company's business model is structured around several key revenue segments:1. Data Processing:This segment is the largest contributor to Visa's revenue. It encompasses fees earned from processing transactions, including authorization, clearing, settlement, and network access. In fiscal year 2023, data processing operations generated the largest proportion of Visa's revenue.2. Service Revenues:Visa earns service fees from financial institutions for providing support services such as account management, consulting, and data analytics. These services assist clients in optimizing their payment programs and enhancing customer engagement.3. International Transaction Revenues:This segment includes fees from cross-border transactions and currency conversion. As global commerce expands, cross-border transactions have become a significant revenue source for Visa.4. Value-Added Services:Visa offers additional services such as risk and identity solutions, open banking, and advisory services. These value-added services account for roughly 20% of Visa's net revenues.In fiscal year 2024, Visa reported total net revenues of approximately $35.9 billion, reflecting a 10% increase from the previous year.Visa's diversified revenue streams and strategic focus on expanding value-added services have reinforced its position as a leader in the global payments industry.Visa has been under scrutiny lately by the DOJ and could find itself to pay in a possible antitrust lawsuit but it's still a great business with a great moat. Furthermore, Visa's business model makes it a great hedge against inflation.

VISA DCF STOCK ANALYSIS. BUY OR SELL

Here’s my assumptions:Risk Free Rate (10 Years Interest Rate Swap): 4,357%Risk Premium (Taken from the NYU website): 4.6%Interest Rate Spread on The Risk free rate ( For the cost of debt calculation): 1.5%
HISTORICAL DATA
Revenue growth in the last 10 years (CAGR): 11.06%Earnings growth in the last 10 years (CAGR): 13.7%Unlevered Free Cash Flow growth in the last 10 years (CAGR): 7.76%FUTURE ASSUMPTIONS
End of Year FCF growth: 6%Growth until end of 2027: 7%Growth until end of 2034: 5%Perpetual growth: 3.2%Net Debt: $6.275BStock Options Present Value Assumption: $1.129BRestricted Stock Units Present Value Assumption: $2.617BStock Valuation based on these assumptions: $321Last update: 02/13/2025

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