Wrapping Up 2024 - Another Year of Robust Earnings Growth and Multiple Expansion
+12.5% FX-neutral growth in NOPAT/share over the first nine months of 2024
Welcome to another weekly digest to stay informed about everything that matters most to quality growth investors!
The goal of these digests:
to elaborate on premium members’ questions (you’ve provided some great inspiration for future posts and deep dives, thanks for that!);
to have a high-level discussion on some macro events;
to elaborate on some fundamental topics;
to talk about portfolio strategy;
to highlight a research piece that may be of interest to our members;
In case you’ve missed our previous articles/webinars/earnings recaps/deep dives:
Thank You!
This will be the final Substack post of 2024, as we’re preparing for the year-end vacation/festivities, and considering all our companies have already presented their latest set of results.
Before we move onto a short review of 2024, we’d like to thank all of our subscribers (premium and free members) for their unwavering support to our work and their contribution to our private Discord community, which has never been more buoyant. We’re very fortunate to have so many field experts, especially in areas that we’re not familiar with (AI, semiconductors, financials (e.g. insurance). Thanks very much for your dedication!
What do we have in the flight for January 2025? We’ll share a two-part webinar series on our strategy’s key pillars and we’ll go through the investment theses for all our portfolio holdings in great detail. It’s a great recap for those who’ve been on board for longer, and a must-watch for newer subscribers.
Additionally, we’ll publish our Q4 and FY Letter to our Partners. Our portfolio has evolved since early January of this year, as we’ve cleaned the small toehold positions in stocks where we couldn’t manage to a decent-sized allocation.
As we’ve stated earlier, we maintain 25% of our investable wealth in cash or cash equivalents or similar strategies with very low market exposure (outside our brokerage account, which is always fully invested and whose returns are reflected on our Portfolio page). There's more to life than investing: travelling, buying new furniture, whatever and life is unpredictable, so we personally want to have sufficient cushion.
Lately, we’ve noticed increased interest in discussing how to sustain purchasing power for excess cash. We’ll cover our alternative strategies in the first part of the above mentioned webinar series. Our Substack isn’t just about recommending stocks; it’s about creating a research hub on various topics that may be of great interest to our premium members.
This week, we were hosted by Robin Speziale on his show “Capital Compounders”. The YouTube podcast is set to be released very soon, and it covered our Constellation Software deep dive, the spin-outs, and the similarities with other compounders (we’ve talked about culture, compensation, decentralization, talented managers).
With that, let’s turn to the content of this final weekly digest of calendar 2024.
Another year of solid earnings growth for our companies, and multiple expansion. Our portfolio-weighted growth for EBITA per share (or NOPAT, which is the after-tax metric) stood at 12.5% over the first nine months of 2024. Bang in line with our compounders’ long-term average of low- to mid-teens percent growth.
The unpredictability of drawdowns;
AutoZone’s Q1 results and additional color on where we are in terms of valuation, optionality.
Investor expectations heading into the new year.