This Weeks Narrative

THE REAL BOTTLENECK IN SEMICONDUCTORS

No matter which chip companies end up dominating the future (Nvidia, AMD, Broadcom, Micron, Samsung, etc.), they all need to be manufactured somehow.

And to make that happen, they rely on cutting edge semiconductor equipment.

So let me introduce the Fabulous Five, the companies that build, sell, inspect, and maintain these machines.

Each one is essentially a leader with a near monopoly in its own niche.

The market has taken notice, and their stocks have soared over the past year:

🇳🇱 ASML ($ASML): +138%
🇺🇸 Applied Materials ($AMAT): +250%
🇺🇸 La

m Research ($LRCX): +326%
🇺🇸 KLA ($KLAC): +201%
🇯🇵 Tokyo Electron ($TOELY): +187%

Of course, past performance does NOT guarantee future results. These returns are worth keeping in mind, but each company deserves its own in depth analysis.

What do you think of these companies as long term investments?

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A LIST FOR DIVIDEND INVESTORS

Earlier this month, Morningstar released its list of the 10 best dividend stocks.

Morningstar consistently puts together some excellent dividend stock lists.

For each company, they clearly show:

✅ Expected dividend yield (some yields may have changed since publication)
✅ The strength of its Economic Moat
✅ The sector it operates in

All 10 stocks received a 4 out of 5 rating from Morningstar's analysts.

It's a great starting point for generating ideas before doing your own research.

What do you think of this list?

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SUPER INVESTORS ARE BUYING

Several super investors are buying these three stocks, even though their valuations are currently near 10 year lows.

1️⃣ Microsoft ($MSFT)
Forward EV/EBIT: 16.5

2️⃣ Amazon ($AMZN)
Forward EV/EBIT: 23.8

3️⃣ Mastercard ($MA)
Forward EV/EBIT: 19.8

In other words, based on their most recent purchases, some of these super investors are currently sitting on unrealized losses.

What do you think of these three companies as investments?

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3 AI Proof Compounders With Consistently Growing Cash Flows

For anyone worried that AI could turn out to be a bubble, here are three quiet, boring compounders whose businesses are largely unaffected by AI.

1️⃣ Rollins Inc. ($ROL)
The industry leader in pest control services.

2️⃣ Cintas Corp. ($CTAS)
Provides uniform rental, workplace safety, and facility services.

3️⃣ Waste Management ($WM)
The leading waste management and recycling company in the United States.

All three have delivered consistent growth in revenue, EPS, free cash flow, and dividends for many years.

That said, because of their stability and resilience, these stocks have historically traded at premium valuations.

Do you have any defensive stocks on your watchlist?