Rebuilding My £2M+ Stock Portfolio From Scratch (Full Tutorial)

I've grown my portfolio to over £2 million, and I don't say it to brag, guys, but this is YouTube, so I've only got 3 seconds to get your attention and 5 more to explain why you should stick around. I'm James Helliwell, I'm a former professional trader, and in this video I'm going to show you exactly how I pick stocks and rebuild a portfolio with you in real time from start to finish, which you'll be able to follow whether you've got £50K, £100K, or even £1 million to invest. So before we go any further, here's my account with Hargreaves Lansdown. I've got Lil Lyca there, small amount of active savings, and here's my pension, which at the beginning of the year was close to £2 million, meaning I've gained around £300K through June. So here's how I did it and how I'd rebuild my portfolio if I was starting again today. So the tool we're going to be using is the quality stock screener that I've built. So there'll be a link to this if you want to try out. It's completely free for 7 days. You get access to all of the other tools as well that I talk about in my other videos. In the description below. So let's go ahead and launch this, and this will give us the universe running the filter that I used to apply for the fund, and I still use to look for stocks to this day that attempts to categorize quality businesses. Because the idea is that we want to find things that we can hold for the long run, ideally, because the trend is your friend until it bends and then ends, as they say. Getting back to it, we'll drop the names that pass our criteria or end up on like our maybe list for further research here. And I think just to stay organized, we'll have a no column as well so we don't get lost. The only other websites that we might use, um, are here, Fiscal AI. I have no affiliation with them. I just think that they're very good for looking at fundamental charts amongst other things. And of course, TradingView for the price charts if we get into that. So let's begin to go through these. We can just knock that off for now. And let's take a look at the company that's number 1, and we'll work our way down the list to see how many of these pass. It's not so obvious that we'll necessarily invest in all of these. This is just a research engine. This suggests ideas. And when we get stuck into the analysis, as you'll see, things don't necessarily line up all of the time. So even these high-ranked companies are not necessarily all going to make the cut. And this is why it's really important that you follow along and keep those risks in mind. So the first one is Fortinet. Now this company you might not have seen before, and you won't have seen the fundamental profile before. So this will be the same kind of layout for everything that we'll look at here. On the right-hand side, you've got a sort of footprint or radar chart spanning the 7 factors that I look for to define quality stocks. And overall, that's the rating for the so-called Intelligence Score. On the left-hand side, that white dot is the comparison for the peer group. So this is relative to all stocks, every stock in the universe. So 600 of the MSCI World quality companies, and this is the sector average. So in this case, we're looking at tech and you can see that Fortinet excels. That's why it's number one compared to every other stock in the universe. And on most factors apart from reinvestment and valuation relative to the universe. So the two that stand out here are the reinvestment rate and valuation. So many of these stocks are not going to be cheap. If we pull up Fortinet here on Fiscal AI, you'll see what I mean. And this is a company that I own, just for complete disclosure. And as we go along, of course, none of this is a recommendation or investment advice. I'm just showing you how I would rebuild my portfolio if I was doing so right now, so you can follow along. So if we click into the financials, bear with me. The thing that we want to look at is in the ratios, and we can look at the valuation because that's the thing that might heed a bit of caution. So what I like to use is price to free cash flow instead of price to earnings. I look at cash flows as the truth, or closer to the truth. Even if nothing is quite the whole truth. So what you can do here is look at the chart of the valuation historically and put the median on. This is what we'll be doing every time we look at one of these. Now we can see that it is towards the top of the valuation range. It's been as low as, call it 18 times, 17, 18 times. And it hasn't really touched 50 before, and that is where we're getting to now. So it is looking very expensive. Now, what I'd like to point out is that this is a company that I've held for a period of time, and the earnings have of course grown. The free cash flow has grown. Which means that I wasn't paying 47 times free cash flow. And in fact, this is the crucial bit, guys, especially for other ideas that will appear as we go through this process. As recently as May, the 1st of May, it's currently the 13th of July, so 6 weeks ago, it was trading at its historical average. Multiple. So you could have bought it for an average price only 6 weeks ago, and now it's been bid as optimistically, if you like, as hopeful for the future as it's ever been. And this is the power of the fundamentals. That's why it is number 1, because it is green across the board, safe for reinvestment. We'll get onto that as we go along. Across the board and valuation would've been maybe orange or green going back 6 weeks ago. So that wouldn't have been a red. So the market has woken up and realized why Fortinet should be at an all-time high. And not surprisingly, it's one of my favorite companies. Now this period here. Was a test actually for shareholders, myself included, because what happened, and this will apply also to a bunch of the other stocks that we'll be looking at, especially in the top 10 and top 20. What happened is that this got caught up in the SaaS-pocalypse, in the big software sell-off earlier in the year. Now, a few of the names that we'll get onto, which are flagged as having that AI risk, which you may notice Fortinet does not have, and hence my conviction when it was being tested. It got thrown out, baby with the bathwater, as I say, as part of that sell-off. So it was sector-driven or industry-driven and not due to the internal fundamentals, the intrinsic value, if you like, of Fortinet as a business. And hence I stuck with it and I was telling people around the time personally that because it was a number one rated stock in my universe and because it was doing this, it sold off and then got sideways. It looked like an incredible opportunity. Now this stock has moved from $80 to $160, so it's doubled in the space of, well, between the March sell-off The SaaSpocalypse, and now July, so barely 3 months. So would I own it at this level? Yes, I would. I do own it and I would continue to own it at this level. Would I buy in? That's the portfolio, guys. Done. Buy Fortnite and chill. No, that's obviously not the recommendation. I think we should be looking to find at least 10 yeses. And a few maybes before this session is done. So I'll keep those in white so that we get at least 10 and a few maybes. Ideally, I want to find 15 to 20 ideas with you here, and it could take some time if I keep going at this pace. So let me pick things up, and hopefully with each stock, there'll be something new to consider, and you'll begin to piece this together as we go along. So Fortinet makes the cut. And had that have had an AI risk warning, which we'll see now with Mastercard, at that valuation, I might be a bit more concerned, especially as it got caught up in that sector move. But I'm not. It's at a record high and it had blowout earnings in that period once again, and hence the Sharpe re-rating. So Fortinet, yes, we've got our first one. Now moving to Mastercard, and we've also got Visa in 4th place, so we can kind of COVID these off together. Let's have a click in. And also what we can do is compare the two. So if you click the checkbox here, we can compare the selected and see that the footprint is similar. For me, Mastercard looks to edge it. So we'll go off the analysis of Mastercard individually. Because if, and as I have previously owned these companies, I would've taken a half position in both of them and just owned Mastercard and Visa. But for choice, I would go with Mastercard. This has been one of the greatest compounders or quality stocks since it IPO'd. Is it 2007? Actually, 2006. It has stellar metrics across the board and relative to other financial similar stocks, which kind of lower the benchmark a little, I must admit, it excels. So are there any concerns here beyond the obvious AI risk? Let's take a look at the historical valuation here, because even if something has this threat of AI at the moment, Some stocks, as we've gone to see in software, have been so heavily discounted now. There is talk gathering in Bloomberg on the newswires in the past few days that the big funds are beginning to look at these again and almost take a contrarian stance in selling semiconductors, the chip stocks, and now rotating back into some of the software names, a reversal of this trade, which just in case you hadn't seen it, we're essentially talking about if we take semiconductors, SMH versus IGV for software, you can see what's, well, it's been a continuation, but you can see what happened in March, this trend or February time, this trend accelerated. So people are just wondering about reversal now and playing it slightly contrarian. So that's a hell of a move. Even for something that was trending hard, that's a hell of a move that's taken place in the last year. So 12-month momentum is mad. What goes up? Does it come down? We'll see. We'll see. I don't think it will. Just saying. I don't think there's a reason to be fearful or fretful over semiconductors, as will become apparent. But on the software side, who knows? For some of the quality, real quality names, there might be an opportunity now. So getting back to Mastercard, looking at the valuation, remember that the market trades based on expectations and things that are at a premium are expensive for a reason because the prospects look really bullish. And things that are cheap are often cheap for a reason because the outlook just doesn't look so great. And in the case of AI disruption, it could have permanently changed business models, meaning that the historical track record, these very fundamentals here, going back to our screen, could all of a sudden count for very little. Now, in the case of Mastercard, I think that's quite a statement to make. And towards these levels, down at 24, 25 times free cash, It's almost as cheap as it's ever traded, even in the pits of COVID where of course there would be a spending slowdown, a consumer recession. We were locked in our houses and then the opposite happened, of course, where we spent loads, trying to avoid the S-word there. And yeah, all of a sudden there was a consumer spending boom. In my experience of markets, Just as the consensus. So when everybody's positioned one way and it seems like a sure thing, a software is going to be destroyed in X, Y, and Z, perhaps in this case now, there's a tendency for the market to do the opposite. There'll be something new or something else that we're missing that when things have been priced to, in this case, a pessimistic extreme, well, you know where the surprise is. It's on the other side of that. That's where you could see a huge rerating. So I think it could be an optimistic one. There's reason for caution in holding Mastercard back when it was at an average valuation, certainly with this AI risk flagged. But now it's as cheap as ever, or as— I'm trying to avoid the words cheap and expensive, but you get what I'm saying. Now that it's trading at the low end of the valuation range, the cheapest it's ever, or the lowest it's ever been. I would say that this is a maybe. I wouldn't rule it out given the fundamentals. I might even get it in yes, but let's see how many of these names we can generate. I'll put it in bold as one to consider, and I'll put Visa on the same line. You can maybe have a half position in both, but Mastercard for, for choice. So that's what we're working through now. ASML. Well, this has been, I think, one of the best performing stocks this year. However, it also kind of fell out of favor, relatively speaking, for a number of months in 2025. It didn't really participate in the semiconductors rally, which it's previously always been amongst the leaders of. So if we take a look at it here compared to semiconductors as an industry, you probably see where it was kind of underperforming. Now there's a lot of AI stocks that have been skewing the performance of semiconductor names, but you can see here, 2024, 2025, I mean, previously been a huge leader really after rates began to go up and there was a rerating due to those macro factors we talked about. It actually underperformed the sector, but there's signs of life again. But it has been choppy. So anyway, waffling on, let's get to the footprint. Is there anything here apart from valuation? Because this is usually going to be the case when looking at quality. Is there anything here that says I wouldn't own that? No, this is a dream to me, at least. This looks superb and it exceeds the average for the peer group in everything apart from valuation because it has rallied a hell of a lot. It's more than doubled over the past, what are we, 6, 12 months nearly. So let's take a look here. We'll do the same thing for ASML. The reason I can skip through these screens, guys, and get to the valuation is that right at the top of the list, we know that, well, there's good reason why they're at the top of the list. It's because the fundamentals are solid, are sound. So we don't need to go in and scrutinize every single one. It's probably what I would do if I was looking at this myself and I had hours and hours, which is what I normally take to look at this. But for the sake of time here, with this being unedited as well, I think we need to focus on the most important thing. So there's no denying that this ain't cheap. You can see the opportunities that we've had recently at 17 times free cash flow. Believe it or not, it's quite incredible. 13 times when it was really out of favor. But the average, we're now at nearly double the average valuation, 35. Now up at nearly 70. So there's no denying that this is at the top of the range and it would make me a little uncomfortable to buy it right now, but thankfully it's a stock that I already own. So We're viewing this as though I was rebuilding my portfolio today. It's hard, guys. So what I'm going to do is show you something else. When you scroll down, the opposite, the inverse of price to free cash flow gives you the yield. Just like if you divide the dividend that stock pays by the price, it gets you the dividend yield. So the free cash flow yield here. Is 1.5%. Now that doesn't sound too great, does it? And the reason that doesn't sound too great is because there's a degree of anchoring going on. So if you're thinking of holding a stock for like 5 or 10 years, then you should probably compare that to the risk-free rate. In other words, having your money in a bond over a similar term, 5 or 10 years, because you're not taking the additional risk of investing in stocks, albeit You don't get any growth from investing in bonds, of course, and we are looking at high growth stocks, albeit with that broad quality profile and moat for many of these companies, say for the ones that are threat of AI around them, meaning that they are likely to continue or sustain that growth, which makes it a different proposition. And hence usually they trade at higher multiples. So 4.5% on a 10-year government bond, 1.5% doesn't look too great, does it? But there's something else here. We need to also have a look at buybacks because many of these companies will be buying back their shares at quite a high rate. Now, in the case of ASML, again, if you count up the buybacks relative to the current price, that gives you the yield, the opposite of that. Same way again as the coupon that a bond pays or the dividend that a stock pays. Or the buybacks that a company does relative to the price gives you that yield. So you could add these together. This is kind of like the holding period that you should expect the earnings power to produce a return of 1.5%. That's only 0.7%. So if you add the two together, there is a little dividend as well, actually. So add the dividend plus the buyback yield, that's 1.1% on top of the free cash flow yield. It's not looking great at 2.6%, is it? It's hardly a bargain. So there's an awful lot riding on this. And I think for now, it's a hard one. It's a hard one because I own it from better levels and it's just rallied a heck of a lot. But for now, I think we have to put it there and I'll leave it in bold because I might come back to that. Depends how brave you're feeling at the time, but because semiconductors have been on such a tear, I do think that there's more risk in this sector now. So that's a maybe. You see that just because they're at the top of this list, it doesn't mean that they're an immediate buy. Visa, we've covered with Mastercard. So let's go into the likes of MSCI, Intuit, and S&P Global. These are all caught up in the SaaS-pocalypse. Anything relating to platforms, in this case, ratings agencies, tax and accounting software in the case of Intuit. These guys are at the heart of, well, the place that's getting most disrupted by AI. And I'm not sure that I'd invest in any of these because of that. Let's pull up the chart for MSCI and S&P Global. I'll show you their footprint first, and you can see that these are very broad footprints, very beautiful footprints, very broad, strong, sorry. The big beautiful companies, great beauty. We've got the greatest ratings. We've got the greatest rating agencies you've ever seen. But the problem is, Donald, that Mr. President, that, yeah, ratings agencies are under threat. And whilst there hasn't been such a nasty sell-off because they have insane fundamentals, I think there's risk in this, guys. I think there's risk in this. It's too much to stomach. S&P Global. So you can see relative weakness in S&P compared to MSCI, two competitors. So from the price action, I think we can immediately rule out SPGI, which for many years was a poster child, if that's the correct term, compounder. Let's just zoom out a bit more. Look at the trend it was on for a decade. Through here until interest rates rose. These stocks traded at insanely high multiples. Let me show you here. And then of course, the threat of AI really hit home in February and March of this year. Let me show you the historical valuation range and you'll see what I'm talking about. So at one point, this was trading at, well, ASML type price to free cash flow, which goes to show even when stocks appear to be a sure thing, which ASML is priced like at the moment, things can change. You can see how the market was increasingly bullish and increasingly confident in the multiple, in the valuation, going from say 20 to 25 times free cash all the way up to 65 to 70, 60 to 65 times free cash. And now look at where we are, back down at 25 times. And that, as I say, is down to two things. Rising rates from those generational lows when it was easy for growth stocks and especially software, ratings agencies, platforms, service businesses reversing. Higher. And of course, AI, which is summed up in, I guess, the rally in semiconductors. So down here, 28 times is not super cheap. If it was down at 20, maybe we would give it further consideration, but that's the reason why we'll stick it straight on there so MSCI can join it here. Or rather MSCI is going there and let's just, sorry, check S&P Global to see if it's the same story in terms of the valuation. Again, let's have a look. Priced free cash flow. Jeez, there's a spike in there. I think we'll need to smooth that out. When was that? '17. Let's try and cut that off. There we go. 28 times. Okay, this is getting towards the lows now. 22, 23. But I'm just not interested. I'm not interested. Gun to my head, if I had to take one, I would take, just to confirm, let's go back to my model and double-check. I think it was MSCI, right? MSCI rather than S&P Global. I just wouldn't touch this. And the market has voted there with the multiple. You can see it, guys. There's a reason it's on its arse, especially relative to a peer which isn't quite on its arse. It shows that there is still bifurcation or a difference in quality between the two, or the prospects, I should say, between the two in a way that we didn't see or wasn't apparent with Visa and Mastercard, for example. Mastercard's right at the low, but it's not that Visa's leading ahead. So that's why I gave it a shot. But with this, I'm not looking at these, but for choice, if I had to, for the reasons I've just said, it would be MSCI that I might otherwise have put on a watchlist. So we can move through those. Intuit, QuickBooks Maker. I always introduce it as that. I don't know why. It's relatable. Well, you can see the price here, not to jump ahead, but again, case in point about how previous track records make this look like a sure thing. And for many years it was. It was a beautiful performance. He had incredible performance, the greatest you've ever seen. I'm sorry, I've had too much coffee this morning. It was, it really was a beautiful, it was a beautiful stock. He had the most incredible performance. Many of the big funds, I'm not trying not to do it, but it's just echoing in my head now. Many of the big funds owned it. I owned it too. For the fund through the pandemic. And then again, these high multiple stocks were tested in 2021. We know the story, guys. We've seen the chart when this happened. Oh shit. The market's oh shit moment. Multiples, which is the price to free cash flow or price to earnings, for example, were put under pressure because when rates go up, equity risk premium or Risk-free rate goes up and that puts multiples under pressure, which means multiples come down, right? And that's why growth gets hurt. Let's pull it up here. This bad boy. Come here, Intuit. Let me give you a lesson here in not paying too much and how the market has a paddle big enough to give any of us a sore backside, as I once heard on a trading desk. Here we go. Geez Louise. Trading at 10 times free cash flow. Now this business is priced for death. It was formerly at ASML levels, 60 times free cash flow. And then what happened? Interest rates went up. Oh shit. They're not coming back down. And then in March, where is she? The SaaSpocalypse. The world woke up whilst I was in Buenos Aires, Argentina, to the fact that AI is going to replace software overnight, which is how I built many of these tools that we're using now, my screener, et cetera. Anyway, by the by, that's quite a fall. If you take it off log, look at this. Plummeted through $600. The high was almost $800, plummeted through $600, so down a third. Sorry, a quarter by that point. And it's now heading towards, well, it's broken below 300. It might be down at 200 before too long. This is incredible. This is one of the best lessons in not being greedy or believing that trends will last forever, which makes me feel a little bit more comfortable about the decision to put ASML, for example, in a maybe at this valuation rather than in just yes. This is an awful lot more bullish sentiment around semiconductors than there is cybersecurity and infrastructure-related cybersecurity software. Okay, getting back to it. Sorry, I lost my head there. Is this now just so bloody cheap that you could have a go? Million-dollar question. Million-dollar question. You know, for the amount of risk that's been priced in, I think for the most part it's warranted. The smallish chance that the market is wrong and it's overcooked, I would put it on here. I, Here's how we could look at things. Is it more risky, or we say the other way around, is it less risky to buy ASML semiconductors where it's super bullish at a nuts valuation than it is buying the opposite side of that consensus trade? Something that will probably be extinct but is priced for extinction and could be wrong. You're betting on a continuation there or a reversion here in the same theme. Would I be more comfortable owning something if we're having to take a risk in the consensus view, owning something at just objectively something at 65, 70 times free cash flow or 10? Intuit. Oh, that's a hard one, guys. Maybe it goes across. Maybe it goes across. We've got to have risk, right? We've gotta have some positions in a book after this. So this at 10, the absolute number, the handle that it's trading on is just so low. It might warrant taking a risk, but these guys are still above 20. MSCI, S&P, the ratings agencies are like 22, 23, 25 times free cash flow. I haven't seen anything so far this cheap, and we might not see anything below 10. That's just mad. So onto Microsoft. Sigh of relief. This is where it should be a bit more straightforward. It's not a company that I absolutely love, even though the consensus does. It's a great company. It's actually where I began my career. I interned at Microsoft before I even graduated and made it into the city. And without them, I probably wouldn't have made it into Bloomberg as a grad. And then that was the door that unlocked my entry point to Citi to reach out to funds, showing my trading stuff, obviously build the tools with Bloomberg, and here I am years later. So personally, I always have a bit of a soft spot or gratitude for Microsoft. But as an investment, I fancied other companies historically through and until the pandemic. So back running the fund through here, it was a great performer. I did own them, but there were better looking alternatives. It was pretty expensive if I recall. Hold the phone, let's have a look. I believe that it had an earnings yield of like 1.5% and compared to treasuries, it just wasn't that attractive. I think back then, sort of 2019, 2020, Google, Alphabet by comparison, if you were thinking of cloud, was moving into cloud and AI and everything else, of course. But Google was trading at like 6 like a 5 or a 6% yield, which means that the price to free cash flow is much lower than Microsoft. So there just looked to be better value out there. So without me, sorry, reminiscing and waffling too much, let's get to the objective reality here. So a median is about 32 times. It's not that far away from it. Now. So actually historically compared to its own history, it doesn't look crazy. So I would be comfortable owning it at this valuation here, even though the absolute number is like 40 times free cash flow. Everything is relative, guys. It had been as high as 55, so I'm okay with owning it here. Previously that wasn't necessarily the case because there was better value elsewhere. So where are we? Maybe it was a little bit later on after the pandemic. I guess I've contradicted myself. I wasn't comfortable before owning around here, but my favorite, if we just pull it up now, was in Google, if I recall. And there were just literally better options. This was my highest conviction position through that period. There you go. Compared to Microsoft trading at like over 40 times free cash flow around the same time. You could have invested in Alphabet at half of that at one point. And you can see the rerating here where it's gone from 20 to 30 times, which is when I was screaming at people how bullish I was, which probably explains why I don't have many friends. I was screaming at them about Google and I was a matter of a few dollars away from taking the entry that I was looking for. And basically literally putting my house on it. I'd sold my apartment at that point and I was going to go all in rather than spreading out. I was going to go all in on Google. It was not far away. I was talking about it through 2022 as it was falling, as everything was falling, as rates went up. Let's bring this back. I know we jumped around a bit, but as everything was falling here, and of course the S&P was falling here, and my manager at the time, I was telling him, I just don't care. He was telling me that everything was different. Rates are going up and nothing will recover. Microsoft doesn't matter. It's pretty wrong there. Google doesn't matter. Now, I wasn't that bullish on Microsoft. This is how we're meandering. I was super bullish on Alphabet, and he was telling me that it just didn't matter. I was waiting at about 75. That's how close I was from 85 to 400. Man, almost 5x that would've been. Imagine 5 times your house, 5 times your apartment. The one that got away. Anyway, we live to trade another day. Let's get back to Microsoft. So, ah, I think this will come up in the list a bit later, but looking at Microsoft, there's no reason not to own it as far as I'm concerned. According to the fundamentals. So actually now it goes on the list. That's an easy one to check off. So we've got a couple of tech names so far. Not surprisingly, a lot of the top 10 is tech, and hopefully we'll get a bit more diversity as we continue down the list. We'll look within sort of the top 20 and see how we do for time from there. Now, pharmaceuticals, Vertex. Well, hmm, okay, let's take a look. I'm always a little bit hesitant about investing in things like biotech because I simply don't understand it. The old Warren Buffett principle. I was a generalist portfolio manager and fund manager investing across global equities, so I didn't have a sector specialism per se. And that's no bad thing. It means that I could build a diversified portfolio as necessary or focus in on whatever I liked. Definitely suits you more as an individual because that's how most of you guys are probably investing as well, unless you happen to work in an industry where you really understand it to So looking on paper, I'd like to see greater efficiency. How does it compare to its peers? Well, it's still ahead of its peers. So I think that's probably more of a healthcare thing than anything else. Let's take a look at the valuation. Now, this is one because we're not just talking about Microsoft here. Vertex, I would have to understand the business better. It's not a company that I own currently. So this is the point that you really have to do the reading into what the company does. What the risks are, what the opportunities, uh, where the opportunities lie. And you can see how it jumps around here, guys. I, I just don't know. So for me, I'll be completely honest with you, even though it's in my list, it's not a company I'm familiar with. There's every chance that it could make it here, but I don't understand it. And on this video, we're 30-odd minutes in. It would take me, well, definitely more than 30 more minutes to just read up on this. So I can't say hand on heart or with conviction that I would add this here because I don't understand the company. So please bear with me for that. That's not to say that it couldn't otherwise be a yes, but this is one that I just don't understand as a generalist, and you need to do your own research. As I would encourage for all of these names for obvious reasons. But you need to read into this, guys. I'm not going to slow the video down by waffling on about this or pretending to have conviction in it. So I'm just going to put that on the watchlist. That would require further research. So let's continue down here. Okay. Evolution always appears at the top of, or towards the top of this model, but it's had a stinker for many, many years now. Let's pull it up. So I believe this is a Swedish gaming company, so gambling. And if we pull up a chart, because the truth is usually in the price, let's just pull this up. Where are we? EVO SE. Again, it's not one that has made the cut for me historically, even though it's been highly rated. So it's not one that I have owned. One of the good things that you can do, or one of many good things that you can do, in fact, on here is look across to the last column for any of these companies and look at the price trend. Now, in fact, this is a filter which I'm going to apply here. Anything which has a price trend of less than 75%, so it's ranked compared to peers, 99% or in, yeah, in the case of Microsoft, for example, is about as good as the trend gets, and 1% would be, well, probably negative, right? It'd be really bad. Anything below 75%, probably more like 80%, I wouldn't even give consideration to. There's a reason why the stock is falling or it just has not been trending. It's measuring the trendiness there. And looking at this, there were guys far smarter than me that despite the fundamentals know something that I don't. And again, if you want to geek out on this stuff, which I often do, and I certainly do behind the scenes, right? Would do, but if I wasn't filming, you might put it on there and really want to get stuck into this. But I don't see a compelling reason, guys. It's an ugly, ugly chart for a reason. So that remains as it has ever since I first looked at it over the years. It just remains a no. This doesn't look good for something that should in theory be going up and leading the market given the fundamentals. So just outta curiosity, I think this will be a horrible lumpy one again, but let's just take a look at the valuation. Where are we? Price to free cash flow. Let's have a look and stretch it out. Okay. Trading only at 10 times now. This is something that peaked at like 60 times, but I don't know, guys, it's not for me. It's not for me. I understand these businesses, hand to the fire, Fortinet, Microsoft, absolutely fine. I'd sooner own ASML even at this valuation than Evolution at a cheap valuation. I would also sooner take Intuit over Evolution at a similar rating. So we actually did find another company down at, say, 10 in this case. I would take Intuit over Evolution any day. So actually, I think what I'm going to do is move Intuit across there because I've kind of summed up my own thoughts. Here's an interesting barbell. I'm also going to put ASML in there, and the reason I'm going to do that is because thinking this through, in a scenario where Intuit doesn't recover, ASML will continue to win. In a scenario where ASML sells off, semiconductors, chip stocks, there's a rotation out of that trade, software will come back fucking hard, meaning that we'll win bigly on Intuit. So that's a little barbell that I've just figured out as we're going along. So we're in. As for Mastercard and Visa, we've got to come back to that at the end. Tempted. Okay, so hopefully you can see how we're building things here. Companies that I just know nothing about. Vertex, sorry, you would need to, I'd need to look into that for days. These guys, not that compelling for choice. I'd take MSCI Evolution. Nah. Again, like, don't fight the market beyond a certain, you know, beyond a certain point. All right. What else have we got? Hermès. Okay. Luxury spending. Let's not get too into the weeds with consumer trends and thematics, which again, I do enjoy contemplating, but for the sake of this video and time, I want to take you through the watchlist. This is a company that I love to own, and especially being in Asia, when I walk through malls and I see just this phenomenal scale of consumer spending and wealth and demand for luxury, it's insane. It's insatiable. And it does make me feel, whilst bloody poor, quite smug in some ways, walking through a mall, knowing that I actually, that these guys are actually my customers. Or for many years as an equity holder in Hermès, these guys are actually my customers. But the world is valuing experiences increasingly, and I think that Amongst other themes around detaching from social media, social comparison and all this other stuff. There's probably still enough growth and enough demand coming from Asia. But I really think that the developed world or developed markets and more mature consumers are valuing other things. And even though I make these videos on YouTube, I personally am off social media for a few months now.. And I'm often in places where lots of people are on it, selfies and everything else. It can be quite superficial. So it's not like I'm out in the sticks somewhere where I think that the world doesn't run on social media anymore, but it's only a matter of time before I think the majority of people wake up and yeah, I've just had enough of all of this bullshit on social media, which is undoubtedly, algorithms have undoubtedly driven demand for certain products, certain brands, certain behaviors. And yeah, I think the world, and especially for the elite, they'll still be buying, but I think more of the spending is going to go towards experiences, being offline, being within communities, face-to-face, person-to-person, than it's going to be online, which is what has driven a lot of this consumer demand. Consumer boom away from Asia because Asia's still young, is incredibly wealthy, and has an incredible consumer base, which is what all these companies thrive on. So I'm waffling on. Okay, back to it. Incredible footprint, arguably one of the highest quality companies in Europe. Reinvestment. Let's have a look at valuation. Everything looks great. Let's take a look at valuation, see where it's at. So I believe it has sold off a little bit recently. Where are we? Hermès. For years, this traded at a significant premium. Back when I was a fund manager, you had to have some pretty big balls to own it at the multiple it used to trade at. You can see, geez, it was above where semiconductors are now going into 2021, just before rates rose, coming out of the pandemic when there was that consumer spending boom as a result of stimulus and social media. It was up at 80, almost 90 times free cash flow. Now it's at just 40. So this is back down towards a sensible level, and we'll affirm that by putting the median line on, and it's in fact now below the median. Would I own Hermès in spite of everything that I've said about, you know, the thematics and maybe secular trends? Well, notwithstanding, so I don't deny that those are a thing. To see Hermès down at 40 times below the median of 45. So about, you know, 10% discount to the average valuation. I would take a risk in it here. So I'm going to put that straight on the yes list. Before even looking at the chart, we know we've got that filter already in the screener here. We've got our 75% filter on. Which means that none of these are going to be stinking. And this actually is rated at 90%, so it's in the top 10%. We look at the chart. Okay, sure. That was the prick, if you like, the pop in interest rates, the prick of the bubble. Yeah, people call me that sometimes. No, the prick of the bubble. It was trading at €2,800 a share and it's down at €1,600. So you could probably put some retracements on if you want and whatever else, but I think this is key. Where it was at the peak of the boom in 2021, a peak valuation, it's now back there price-wise, but the valuation is halved, which goes to show in that time, so from November '21 to now, The share price, well, went up a heck of a lot. It added €1,000 before coming back. The valuation has gone from 80 times to 40 times because of the obvious. If we look at free cash flow, let's get into cash flow statement. Where are we? Down here. Because cash flow, in the meantime, the company continues to grow earnings. Bigly, as our friend would say. And here you can see that. So from November 2021, it was doing $2.8 billion in free cash. It's now at $4.2 billion in free cash. So I'm very comfortable with this, even though we see problems with Ferrari. I think it's more to releasing shit electric bloody family cars than it is anything else. And Yeah, the EV stuff. I still think that there's life in the old dog yet, so to speak. So that's it. It's a yes for me. It's like Dragon's Den. It's a yes from me. Hermès, get in the portfolio. Okay, let's get back to it. Cadence, another beautiful stock. I had friends, you know, I got friends of mine. I have, sorry, I just keep doing this. I have friends of mine calling me up. You know, they call me Mr. President. Now they call me up a couple of years ago, said, mate, I've been watching your Cadence trade. That's, yeah, it's at an all-time high. Like, it's doing all right. I don't know where that accent came from. It came from London originally. But yeah, I had some of my old colleagues in the city calling me up and commending me on this one. So pull it up. Sorry, I just knocked that off. Cadence. Reinvestment isn't great. It's pretty poor, in fact. We'll take a look at the valuation, but it excels in every other metric. And we've had a little bit of a spoiler alert there with the price trend, but this is one of the best performing names for me in the last few years. And it's a company that I still own. Just to go back and check, or confirm rather, there's no AI risk here., and it was kind of thrown out with this. It makes software, chip design software for the semiconductor industry. So I believe Nvidia is a customer amongst, you know, the other manufacturers. So where are we? Let's get to, well, let's just have a look at free cash flow for Timeshare, JR. Let's have a look. And you can see here a big beautiful trend. You can see that of course, like semiconductors, it is cyclical. But that's going back nearly 20 years now. Let's get on a more sensible timeframe. 10 years. Nice. Okay, show me the multiple. Let's get into ratios, down to price to free cash flow. Some people like to use EV/EBITDA. I like to use free cash flow. That's just how I roll. Median, 10-year median, 45 times. Ooh wee, it's up at 75 times. Okay. Again, if I wasn't such a lad and I didn't own it towards the average multiple, which I've owned it for quite a while around here, then, you know, now it would be a bit uncomfortable. I must admit it's a similar situation to ASML, but for diversification in playing different parts of the semiconductor value chain. Try not to do any more Trump hands. It's a big, beautiful chain. I would say with the niche in photolithography, which actually, according to the FT, I think, let's see here, ASML photolithography China in the last week or so may have been unpicked, like their IP, which they have a niche in, may have been unpicked by China. So again, that's a risky one. Actually, it's making rethink whether I'd be so bullish in having it across there. Oh, maybe it goes back. Oh, I don't know. Let's come back to that one in a minute. I've got to think of this. Oh, bloody hell. Got my keyboard. I'm so excited. My keys. Oh, there is, there was, there was a rumour or there has been a rumour in the last few weeks. Again, go and look at this. That China might have figured out ASML's niche, which would of course not be good because when you focused everything in a niche, if that comes unstuck, then your business is suddenly worth nothing like what it was before. Oh, so for that reason, oh, you know what I'm going to do? I would consider, I think it has, I think it will be either ASML or Cadence in there as the premium semiconductor-focused play with Intuit offsetting that on the contrarian side of the barbell. Has to be one or the other. Is Cadence at risk of losing its, of having its business copied by China overnight? To a lesser extent than ASML is. We need to come back to this one, guys. I think that has to go back on there. We need to give this some consideration towards the end. So hopefully you can see, as scatterbrained as it may appear, how the research process goes. Let's just take a quick look at Cadence chart. It's broken to new highs. It, as recently as a couple of months ago, was down at the average valuation. So down here, and I think this is one I'm going to put it down as a yes. In my portfolio, but this is one in terms of timing that you need to wait for a sell-off in the market, I think, for entry here. I'm not going to make, again, avoiding recommendations, any timing suggestions here formally other than just maybe we put a little star against that. So it's not a maybe. It's perhaps on watchlist, but the decision to own that company has been made. And I don't know, ASML's got that China risk. Just a little bit uncomfortable about that, a little bit uneasy. So you know what, I'm going to leave ASML there and I'll put a star there, meaning that I would probably own it, but I just need to clear that China risk, that China risk first. So again, further research is needed. And I'm not going to make a hot take, a quick call on this video. All right, Monster Beverage. Finally, we get some diversification away from tech. What an incredible chart. I've talked about this in a recent video on YouTube, how for about 30 years it was the best performing listing in America, I think on the NASDAQ and everything here. Is Stellar has a great footprint. Sure, it trades at a premium, but it smashes consumer staples when you look at it compared to the sector average in white across the board. And sure, it's going to trade at a premium. Let's take a look at the multiple to see how much of a premium. Would I be comfortable owning it? We know Monster Beverage as well. It's very easy to relate to. It's not like looking at Vertex Pharmaceuticals or Evolution Gaming in Sweden. It's Monster. It's a consumer products. We know what's up. Similar to Hermès or what have you. Not free cash flow, price to free cash flow. Okay, let's get the average on the median. It's above it. 36 times, it's now 46. So, you know, there's a reasonable premium in there, but it hasn't stopped it heading higher in the past. I will kind of break my rule now and put it on a 20-year just for comparison. It's not horrendous. It's pretty rich, but I'm not going to let that stop me from owning it. God, I need more coffee, I think. So I'm going to say yes to Monster. As I say, it's something I can relate to and hold on to as a consumer. Hell yeah, it's surged and you'll probably look or feel like a bit of an idiot when this does begin to pull back, like most things will from these extremes in the near term. But long term, fundamentally speaking, would I own this company? It's yes. It's a tick in the box. And in fact, I'm going to put it up there because I don't have any concerns about it. It's a company that I understand and feel— in fact, we'll leave that vacant for ASML, but I don't think that's going to get taken. Okay, Monster. Is a yes from me. And now we've got some diversification away from tech. We've got luxury and I guess a consumer staple, like day-to-day purchase there. Accounting software, bit of software, AI and cybersecurity. So we're pretty diversified and semiconductors there in Cadence. I'm happy to have that in there. And I wouldn't mind a bit more semiconductor exposure. Maybe ASML does get the benefit of the doubt. We'll see at the end. Okay, REA Group. This is an interesting one. It's Aussie property. So it's the equivalent of Rightmove, who I believe they were even trying to acquire earlier in the year, but the UK's competition commission blocked the acquisition. So if you're in the UK, it's basically the Rightmove of Australia. And if you're not in the UK, Is it like, what do you use? Zillow in America? I guess it's like that. It's a property platform. Australia's property market has been white hot for a couple of decades, certainly a number of years. And as interest rates went up, once again, it's that same risk that we talked about at the beginning. As rates went up, of course, property bubbles around the world saw some deflation, saw the steam come out of them. Now, it could have been a lot worse. People were fearing for the worst, and I don't think that's been the case in Australia at least, but it's still exposed. So let's bring it up, REA. And actually that chart is looking nasty, but I think on top of this, What has accelerated it following a correction back to previous high is the threat of AI once again to all platform businesses, many of them at least. This is a difficult one. I tell you what, the multiple is going to have to look very attractive. It's going to have to be on its arse, on its arse to be Aussie, to stand a chance of tempting me on this. Let's have a look. Okay. Doesn't look to be far. Well, it is down at the low, which is going to make this decision a little bit trickier. Oof. Normally 37, now at 27. It's higher than those ratings agencies, S&P and MSCI, who are also getting hit by this. To boot, it's got problems with higher rates affecting property, but is a beneficiary of the Australian property market, which personally I'd love to live in Australia. So I'm all for it. It's a wonderful place despite what you may or may not think. I think it is. Bloody horrible taxes though. So there we go, actually with taxes. Is that also a headwind? More entrepreneurs leaving Australia, selling high-priced properties and basically just not returning to the market, not as much transacting because money is leaving Australia. If money's leaving Australia, that's not good for property, is it? In that country, it's probably good for Dubai property. Hmm. So for that reason, It's not a yes. Is it a maybe? Somewhere between these two. Oh, this is tricky, guys. I don't want to take ages on this video, like agonising. When there is an immediate option, like I would go towards no. But also looking at this trend line and how it's at the bottom of the channel, this could make for a great entry. Albeit, you're going to have to have a strong stomach because it is pretty contrarian. It's definitely not a yes. It might be a no, and that's the reason maybe exists. This is an uncomfortable maybe. I think it should really— oh, it's looking across here. Let's put that there. It's an awkward one, guys. It's just that last tax bit that I've thought of and the brain drain that's probably going to take place in Australia if it's not already started. Anyway, I'll, again, I'll have to come back to that. That's why I'm putting it there because there's something to read into here. I'll just say Aussie taxes. I just think brain drain. Okay. Look into that in the same way as you look into this. So moving on, it could have otherwise been a nice diversifier. Australia property. Something else, something different. But hey, all right, Apple. This is going to be easier, I think. Let's just take a look at the valuation. We don't even need to know the fundamentals are in the top 10. Or is this a lame top 20? See whether it's at a stupid valuation or not, or just a rich one. Let's have a look at free cash again. Okay, it's not stupid. It's been up at 42 times. It's at 35. Looks pretty chill, so to speak. Still at a premium over the last decade, more towards 25s at 35. So it's not cheap. It's not even a nice price, but will Apple continue to grow free cash flow and earnings? Yes, they will. You've got to own something, guys. Is it a better option than the S&P? Yeah, I think all these companies are. Is ASML? Oof, I don't know. Is REA? Oof, I don't know. Is Mastercard probably on balance, that's probably gonna go in there at the end, but we'll say yes to Apple. It's not a, it's not a crazy call to make. Basically is the S&P. Let's just look at a chart just to see where they're at. All right, beautiful. There we go. That's the kind of chart you wanna see. Oh, it's even nicer than the S&P. Not that different, but it's still nice. I'm good with that. So you see how we hadn't even looked at the chart and you just know it's the clarity from the system, from this process, and then just sense checking things like the relative valuation, which of course is in the eye of the beholder. It's down to you to make the call on whether or not you can stomach it. So remember, we have to own some stocks in order to build a portfolio, otherwise we're not in the market. So how many have we got here? That was the 8th and we've got a hole there. So 7. Let's see if we can get 3 more and we might add some more to the maybes before we review things. And then we've got 10 to 15 ideas. I'm aware time is getting on here. Okay. Copart. Oof. Now this, hence the inhale, was a brilliant compounder for a long time. Until recently. So it's vehicle salvage. If your vehicle's written off, as we call it in the UK, at least, if your vehicle's in an accident and it's a so-called write-off, then a salvage company like Copart comes in to, I guess, chop it up and see whether it can salvage any of the parts, the components, and then sell them on. That's its business. As cars become awfully more sophisticated with more technology in the fender, the front bumper as we call it in the UK, thing like Teslas and what have you, all these electric vehicles, Taycans, what have you. There's more and more sensor technology, semiconductors, and all kinds of wiring and components going into these vehicles, which means that whilst there's an argument that driverless or autonomous vehicles will presumably result or see fewer accidents and hence less salvage opportunities, which would hurt Coparts, volume and its revenues therefore. On the other side of that, because cars are simultaneously becoming more technologically advanced and therefore more expensive to repair and easier to just write off and replace. So even with some like a fender bender, the amount of sensors that are in there now compared to before means that actually there's a lot of damage done. I wrote off a BMW at less than 30 miles an hour. All the airbags went off as well somehow. The amount of technology that was in that car resulted in it being a write-off, even though I just sort of pranged the front left or whatever corner, and there was like pretty minimal damage to the outside. Like the amount of electronics in the car is just through the roof. That was a write-off, which is mad. Anyway, getting back to it. There's a problem here, and I think it was slowing growth. This has just come out in the last couple of months. I think we'll pull this up for inspection just before we get into this for context. And you can see that the rating here over the last year has fallen from the average point of 50 times free cash flow. That is a very high average, which indicates a high degree of certainty or confidence historically. That confidence is completely diminished. Let's have a look at the all-time record confidence in this stock as expressed through the multiple is as low as it's ever been. It previously traded like 100+ times free cash flow. I don't know if that's a bit of a mistake, but certainly 80 to 100 times the average bid 50. And it's now down at 19. What's happening to Copart? This is what we need to look into. This definitely doesn't make it to the yes list. You need to, uh, recent financial headwinds. Well, it doesn't really tell us anything. Ooh, a surprise departure of the CEO. That's never good news. They usually know that something's coming. Is it on sale or is it another investment mirage? Let's have a look at Reddit for once. What are the Reddit lot saying? Not that I get my advice from here, but okay, so the CEO stepped down. They missed on revenue and earnings. So growth slowing, which means that paying a multiple of 50 or 100 times free cash flow is is no longer being paid off. So here they would say, well, look, the bear case autonomous vehicles, that's, I've already said, that's the first way of thinking. But the second derivative of that is in fact the opposite, that they're simultaneously becoming far more expensive to repair and hence more likely to be a write-off., and therefore they have lots of valuable resale opportunities for Copart. Yeah, whatever about car insurance. I don't think that guy's on the button. We'll leave that there. Look how bloody cheap it is. Well, is it cheap or is it, uh, has, have things changed? Is Copart at risk of AI? You could say in driverless technology, maybe it becomes super efficient. Maybe, ooh, I wonder if pricing of insurance in terms of settlements and weighing settlements or weighing write-offs also becomes more efficient. And perhaps that diminishes the opportunities for Copart where previously something might have been incorrectly or lazily classified as a write-off. Perhaps it improves efficiency and they realize that a lot of, or a bunch of times, actually that isn't or shouldn't be a write-off. We can do something with that. Maybe it's more efficient pricing with insurance and write-off categorization. It's not looking good, bruv, as I say, it's not looking good. I might have had it in there just for the love of the game. For more research. Is it an AI risk? Why slowing growth? Realistically, it's going to be in here, guys. I think I know, but let's just have a look. Sometimes you can find a diamond in the dirt, so to speak. All right, moving on. We need to find a couple more winners here before we conclude. Paychex. Do these guys process, is it HR and payrolls? I think it's payroll stuff. Easily disrupted by AI. Otherwise has a pretty good fundamental profile. I think Terry Smith of Fundsmith owns some amongst other funds. He's a quality-focused guy. Profitability's not outstanding, although it's better than the industrials sector. Price trend, it's below 80%, which is what I prefer to see. I put 75% as a minimum. Let's have a look. PAYX. We can go to, uh, where do we get overview first? Yeah, it's payroll stuff, HR and payroll stuff. Let's go back, have a look at the rating. And there we go, down at 16 times. Below the median of 25. So it never traded like super duper high because it's still got that cyclicality in hiring. Therefore the US economy. It's as cheap as it's ever been, even during the pandemic. So if AI doesn't replace it, it could be a bargain. So I think it's in the same sphere or ballpark as Intuit. I'm also going to put a star there. I forget what we're doing the stars for. Oh, that was a wait for the market to correct. If we're doing Intuit, We could do— ah, Pages. I think that goes in there. I think it makes it. Now, because I've got to do this quickfire, guys, and add some names, I am going to put it there. But I would encourage you to take a further look at this one in particular. Because you've also got to consider that you're diluting your best ideas with every additional potentially shit idea that you're adding in there. So am I as confident in owning Paychex as I am owning Fortinet? Absolutely not. And I've got to remember that this is diluting them. So another key thing to state here is that you might not want to equally weight these. You might weight these in terms of convictions to give your biggest weighting, your biggest position to those at the top. And as we move down, particularly for the likes of Paychex, maybe Intuit, Cadence, perhaps give these a lesser weighting. For illustration, let's give it the benefit of the doubt. I'm going to put a question mark against it. So I think in the real world, whilst I'm trying to make this as close to how I do it as possible, I would be agonizing over this for a bit longer. Um, and you know what? Mastercard isn't going to be replaced overnight, not in the next year or two. So I'm actually going to put that in there. I've wanted it in. So we've now got, whoops, we've now got 9 names. Let's see if we can get a 10th and then a couple more on the watch list. So let's just say yes to this. It's just so bloody cheap, guys. And it's not like the stock price is at an all-time low or anything like that. Or even the pandemic low because it has been growing free cash flow. The pandemic low, so it's valuation-wise, it's as cheap as it was during COVID when the world was locked down. Nobody was in the office. Everybody was going to lose their jobs apart from furlough. It's as cheap as the depths of the crisis, and yet the share price is at 110. Compared to 42, which means that earnings relative to the price must have increased a ton over that time. It's not to say that it'll continue. Maybe this is the end of the world, but if we're okay owning companies at 75, 80 times free cash flow, maybe we should be equally willing to risk or gamble on things like Paychex down at 16 times and Intuit down at less than 10 times. So we're going to give that a tick in the box. Progressive Corp. Let's take a look at this one. Financials and insurance company. Am I that bullish on insurance? Well, I think efficiency is going to be improved by AI. Does that mean that it replaces entire companies or they just incorporate it? More likely to incorporate it, I'd imagine. So let's have a look at this one. It's a financial industry one, which I tend not to like. Um, but let's just have a look. PGR. Let me just quickly go to the overview as well. Um, so it seems to be general insurance. It's like cars, property, other stuff. Let's go back, look at the multiple. Just get a feel for the risk that's priced into this and get this on. You can see that as a financial, as a financial stock, like they don't trade at the same multiples that we've got used to looking at tech, but it's all relative to the sector, right? It doesn't mean that that's an amazing bargain, but at 8 times it's below the median of 8.5. So about 10% below the historical range. So if you do like the company, there's nothing stopping you, or there should be nothing stopping you looking at the valuation. When we look at the chart, I thought maybe this could be one of the ugly ones. It is coming back. It could be worth a go. Do I think that it's going to like storm ahead? Well, who knows? I don't think so, but who knows? Is it one to consider? I definitely have it. Definitely maybe. I definitely have it here. And again, I think for the sake of these, this demonstration, I would consider it. It's diversifying away from tech into insurance. We don't own another insurance company here. And who knows? Yeah, who knows? I think it's worth looking at. We'll put another question mark there. Because in reality, this is one that I'd want to take a bit more time on to understand its business. But there's no immediate AI risk flag there either. So we've looked at, there, sorry. So we've looked at those. Rollins Pest Control. Okay. Are cockroaches going to disappear in a recession? No. If interest rates go up, are cockroaches going to disappear? No. The amount of commercial property and demand for offices could of course recede with higher rates, a recession. Not saying that we're getting those, but rates are higher. However, pest control, and these guys are the leading company in pest control globally. I think that's a good niche to have. Their customers also sign multi-year contracts with them, which means that it's very sticky, the revenue base. So it's not the kind of thing you can just cut when the world slows down as it does every 7 to 9 years historically. So it makes it pretty durable. Now, I don't know what this is about. It must just be a rerating if growth has slowed slightly in terms of revenue and earnings because there's no threat of AI here, right? Unless you say, Well, if machines replace humans, then the demand or the requirement for office space is also going to be under pressure. That's plausible, but there'll still be demand for pest control, guys. And I'm sure this company's smart enough to pivot into doing residential if it doesn't do already, away from commercial. So why is it priced for death? It's a bit of an exaggeration, but it appears to be at a 10-year low, 34 rather than 44. So it's not super cheap, but relatively speaking, it is at a significant discount. My goodness, a 20-year low. It's a yes for me. It's a yes for me. And again, all of these companies you would look to do more research into. You take your time with them. But I've owned Rollins over the years. It's one of my favorite companies. And actually, if you look at the all-time history, funnily enough, when rates began to fall, remember what I said about rates from 1981 through to 2021 falling, growth stocks doing the opposite, it helping them. There you go. It used to go sideways and they traded in the same Premium, like many stocks in the era, 1981. It's an incredible compounder. So again, for speed here and just thinking logically, I'm going to say yes. I'm going to say yes to Rollins. I think it looks to be at a good discount at this point. What's cheap could be cheaper tomorrow, but cockroaches will still be here tomorrow. Maybe Yeah, without waffling on too much, maybe offices, oh my God, it is the end of the world. But wasn't that the same story here when the stock was only $22 a share before it got up to $62? It trebled and now it's at $42. It's still double where it was there where the world was ending and we're never going to be in offices again. So it's a yes for me. So looking at our list, that now gives us 11 names and 4 on our watchlist. So a total of 15. I'm just going to take a quick look. We've got 3 hard nos. I just want to take a quick look where Rollins is. That's the 18th company. Let's take a look at 2 more. So then we've evaluated the top 20 with the trend filter on. And then we're done. So Moody's, this doesn't have the AI risk flag, which surprises me. And look at the resilience in the share price, relatively speaking. So this doesn't look bad. Let me just compare this Moody's to say, I don't know who's more relevant comparison, S&P Global, which was our choice. I think it was MSCI, wasn't it? Yeah, MSCI was our preferred Victim. Let's have a look. Okay, so white looks better than green to me. So MSCI does look better than Moody's, and that would explain why it ranks higher. What I want to look at though is the rating. So we're doing Moody's, MCO, is it? Yeah. Okay, we'll get the historical range on. For price to free cash flow. Okay. And it's in line with the 10-year median. So this is a stock that was trading as high as 50 times cash flow. During the pandemic, it traded down to 20 times. So at 30, still somewhat elevated, and it's considerably more expensive than— was it 23 times for S&P or MSCI? I forget which. Moody's doesn't have the AI risk flag. It would give us some diversification. You know what? The chart actually looks decent compared to SPGI. It's a little bit better. MSCI, getting mixed up with these ratings agencies now, was pretty resilient also, but it's got the AI risk flag. Would you give Moody's a go? It hasn't moved a great deal recently. This for me would be a watchlist one. And the reason I say that is because you could otherwise fill this slot owning the S&P. I don't think it's going to, I don't see it outperforming the S&P in the near term, looking at that momentum. And it's not the most compelling valuation. It's average. It's average. If it was to get a bit lower, I'd be tempted to add it for diversification. Going into a ratings agency here because we don't get it through S&P or MSCI. I'd have them on watch. Yeah. Could we put it in the portfolio? Just taking a look down this list. It'd be nice to have something a bit different in there. Something else a bit different. Let's see. I don't think it's cheap. I don't think it's cheap enough. It's okay. It's in line. Am I crazy for those fundamentals? I'm not exactly crazy. They are, I don't know, they're pretty good, right? I'm waffling. So let's leave that on. Let's leave that on watch. That's gut instinct is there. Maybe it goes across at the end. We'll see. Last one for now. ADP, payrolls processing. I think this has seen a big correction due to the threat of AI. Which is flagged here. So this is just a no from me. I'm not even going to start messing around with fundamentals. This isn't as high up the list now, and it's got AI risk flagged, which not many of these companies down here do. Just cross this off. You know, there's not many of these flags around here. So given that it has that, I'm just going to put it in the no. For curiosity, I'd like to know what the multiple is, how hard or heavily it's been discounted. Let's just go down here once again. Okay, yeah, it's been discounted heavily. You might think that I sound like I'm contradicting myself when I said yes to Intuit for accounting earlier. But that was at 10 in absolute terms, 9 point something. This is up at 20 times cash flow nearly. I mean, there are probably better companies amongst these that aren't far off that. I mean, most of them trade at a premium, but you know what I'm saying? Not good enough. I don't think. Let's have a quick look at the chart. This was a compounder for many years. It did suffer when rates went up. Kind of went sideways, saw a bit of a renaissance, and it's just come back given AI. It is a hell of a trend, a hell of a compounder. It's got AI risk there. I just, you just don't need to mess with it. On another day, again, the love of the game, you, you, I would suggest you look into this, but you just, only if you're short of ideas, you don't need to take that risk, guys. I'm going to stick it in there. I don't think it's changing the world. And yeah, why take the risk? So I think this is a good starting point and you don't need to hold so many companies when you're concentrating within quality. So let me pull up a chart and we'll take a quick look at this basket. So I think you can fit a maximum of 10 names. So what we'll do is we'll drop out Progressive and Paycheck So we weren't too sure about those and take a look. Okay, so exactly as I suspected, if you were to do a comparison of these ideas compared to the S&P over the long term, they've absolutely smashed it. You've 22x'd your money compared to 8x with the S&P. However, year to date, this is going to look pretty shocking. So the portfolio's in green and the S&P's in blue, but that's because we're now looking at companies that are available at a discount for this reason. So we weren't holding from that point at the beginning of the year. So the near-term comparison is actually our opportunity. It's not relevant. So the reason we're on sell now is because it's already done this. So what we need to focus on is the longer-term picture. That might be too long, but let's say over 10 years, 5 to 10 years. So this is what the game is about. Now, I did say at the beginning that besides AI and inflation, so the macro risks, there was also one other thing to be mindful of. Now, this video has obviously gone on for a long time, so I'm just quickly going to direct you to where you can find more information about this. And again, I'll include a link to this in the description where you can get a free trial of the screening tool that we've looked at along with the others up here and the watchlist I'm about to show you. So I mentioned inflation. Now at the bottom, I've put together a bunch of watchlists for the top stocks in different categories. And what you likely won't find in the screener are many options when it comes to inflation hedges because these tend to be in more cyclical, lower quality areas of the market, things like natural resources. So I've put a link to the report which members can access here. Like I say, there's a free trial if you want to check it out. And there's an in-depth video analysis where I'm updating you on what I think has changed, going through the valuations, the fundamentals in exactly the same way as we have in this video. So what we might look to do with this is incorporate a few of these ideas if you are worried about inflation as a hedge. So now you've seen exactly how I got my portfolio to where it is today and what I'd do if I was rebuilding it from scratch. Watch this video next, which YouTube thinks you're gonna love, and frankly, I hope there's gonna be lots more insights in there that you're gonna find useful too. See you in the next one.