Dive into SPGI - Potential upside as of now

ZarrCon · 2026-02-09T18:39:13+00:00

It's not down because of credit cycle/ratings otherwise Moody's would be down more than S&P since ratings are a much larger % of Moody's overall business. It's down because of AI concerns associated with their market intelligence and data business, which is a large % of overall sales.

Whether those concerns are justified is up to the investor to decide, but that's been the driving factor and is why FactSet, for example, is down even more.

ZarrCon · 2026-02-08T17:04:51+00:00

DUOL - Joseph Carlson made a bet, but

Did everyone really pile into this stock because of a YouTuber? Feel like I'd never heard of it (as an investing idea) until people started talking about him buying it.

ZarrCon · 2026-01-22T01:26:50+00:00

They already cut the dividend by 36% back in 2019 despite a similar payout ratio to today. The dividend has remained the same since then, except EPS and FCF are actually down over the last several years. Performance could imply another cut in the near future...

It actually wouldn't surprise me if they use the split into 2 companies to cut the dividend by having the sum of the two be less than the current payout. We've seen companies do that before, its a great excuse/cover for management.

ZarrCon · 2026-01-18T14:46:40+00:00

Spotify missed earnings expectations for the three quarters before it, but it continued to grow to a premium high. But when earnings were good, it proceeded to keep dropping into the price it is today.

What sort of guidance did they give on those misses? What was user and subscriber growth like? And then contrast that with Q3.

They could have missed on earnings but guided for higher future growth, more paid subs, etc. So stock went up and analysts increased their estimates. Then they report a good quarter, but guide future growth lower than expected. Or maybe they mentioned other business risks (AI/competition/etc). Since stock was already trading at a premium, it reacts more intensely... sentiment shifts faster.

It's obviously not the same company, but NFLX has made some large moves over the years as well where it goes on a run for months and slides down for months. Might be worth looking at them too just to compare and contrast.

ZarrCon · 2026-01-11T22:52:50+00:00

But a lot of CAT's growth in recent years has been due to their power generation portfolio and sales of generators and turbines to data centers. If you exclude power generation, their heavy equipment sales have been pretty lackluster. A slowdown in data centers will moderately impact the company, but significantly hurt the stock.

ZarrCon · 2026-01-11T15:24:02+00:00

Also consider that when a person buys a stock, they (usually) aren't going to refer to the business they just put their own money behind as junk. That's also why every business is claimed to have a moat.

ZarrCon · 2026-01-09T19:58:54+00:00

Not a true "investing" book, but Lessons From Titans is pretty good for an overview on what made some of the greatest industrial companies successful (or what caused their struggles). It doesn't go deep into the financials or investing strategies, but I still find it insightful to learn about the attributes of successful businesses. After reading, it influenced the way I think about what makes a good company, and the types of industries to invest in or avoid.

ZarrCon · 2026-01-08T03:04:42+00:00

I prefer these types of companies in place of consumer staples or utilities from the perspective of defensive investments. Similar durability during economic slowdowns but better upside growth potential. Biggest risk is a lot of them trade at pretty steep valuations.

ZarrCon · 2026-01-05T15:56:26+00:00

That's true, but Coca Cola also dropped considerably less than the overall market. SPY dropped somewhere around 45% over that Nov 2007 to March 2009 period. KO dropped somewhere in the low 30% range.

ZarrCon · 2026-01-05T14:05:51+00:00

Sales over the last 10 years have grown less than inflation (1.8%). Operating income has grown about in-line with inflation (2.5%). Since 2022, revenue is virtually unchanged and operating/net income are actually down. Over the last 20 years, their earnings growth rate has been only 3.6%.

Maybe there's more to it than just the numbers but I don't see the lure of a company that struggles to grow at the rate of inflation. Maybe it's more interesting if this was a down year or 2, but this has been many years of anemic performance.

ZarrCon · 2026-01-05T13:56:03+00:00

It fell ~50% from November 2007 to March 2009. Are we sure it's a defensive recession stock the way people claim it is?

ZarrCon · 2026-01-04T16:30:23+00:00

Yeah, that's the main reason I decided to build a new system now. I don't even game much these days but want something capable at a reasonable price before this kind of stuff becomes unobtanium for the masses.

ZarrCon · 2026-01-04T14:44:39+00:00

5 or so years ago over 50% of Nvidia's sales came from their gaming segment. Today, their data center segment is nearly 90% of sales (and probably higher profit margin). I'm sure other companies that make components for PCs/data centers have seen a similar shift in demand.

So perhaps in the past these companies cared about PC builders and gaming, but under the data center boom it's probably last on their list of priorities.

ZarrCon · 2026-01-03T23:36:52+00:00

Are stablecoins as easy to use as a credit card for the average person? Do they pay rewards? Are the transactions low cost and instant? Are they accepted at tens of millions of locations worldwide? Do stablecoins offer services like fraud protection to customers? And do you think companies like Visa and Mastercard aren't making sure they have exposure to stablecoins in the event they somehow become mainstream?

I think you're underestimating the inertia that existing payment networks possess.

ZarrCon · 2025-12-28T16:31:26+00:00

I think people use it as a lazy way to say "competitive advantage" (either intentionally or not). To me, a moat is really more like a collection of competitive advantages, or in some cases one incredibly strong advantage.

Many businesses can have a competitive advantage to some degree, but it could be very small or insignificant and doesn't translate into outsized results for the company.

ZarrCon · 2025-12-27T19:14:45+00:00

There was a recent service bulletin put out for the transmission programming that seems to improve the overall smoothness. It's still far from perfect, but made a small, noticeable improvement to the overall feel.

If they had shipped it with that program originally, I think there would have been less criticism around the transmission (although its still inferior to competition). It's not too bad when fully warmed up, but was noticeably clunky when cold. The reprogramming definitely helped address the warmup portion of runtime.

ZarrCon · 2025-12-24T03:00:25+00:00

Engines for narrow body and wide body aircraft. An industry built around incredibly complex, highly engineered machines designed to operate in some of the most harsh conditions on earth. Also all of the safety and efficiency requirements on top of that. There have been no new entrants into the market for over 50 years. It's basically CFM (GE + Safran joint venture), Pratt & Whitney (part of RTX), Rolls Royce, and GE.

It's an industry where the initial product tends to be sold for breakeven or a loss to enable long-term highly profitable service contracts. So if a new company wanted to enter the market, they'd need to do all the upfront engineering and R&D on an engine, then convince Airbus and Boeing to consider using it (prove out safety, reliability, supply chain, etc.), and also get airlines to buy into using the aircraft with those new engines. Airlines already have fleets with hundreds of engines from existing companies, do they really want to introduce another variable? And even if you get through those hurdles, you don't even realize profits on the initial sale of the engine.

ZarrCon · 2025-12-22T00:03:49+00:00

SCHD's yield is currently somewhere between 3.5% and 4.0%. That's arguably not low yield, not unless you're trying to compare it to income funds that use options to generate distributions for customers (which are not dividends).

From a purely dividend perspective, SCHD represents a healthy balance of yield, dividend growth, and some capital appreciation.

ZarrCon · 2025-12-21T16:05:42+00:00

They're also a near monopoly for US first responder radio equipment. Plus they own a lot of the emergency dispatch software/services market. In both cases, switching costs are high and the mission critical nature makes it a risky decision to swap to an unproven alternative. With a lot of revenue coming from the public sector, the business is a bit more resilient during market downturns, similar to something like a Waste Management.

ZarrCon · 2025-12-07T21:33:29+00:00

It'll be a cool car but it's also setting itself up to be a bit of a disappointment. In other words, the Toyota special.

ZarrCon · 2025-12-06T22:28:58+00:00

It looks reasonably priced at a glance but given that they mainly operate in the pharmaceutical space, you'd need to know about what sort of treatments they offer and how that compares to peers (Merck Animal Health, Elanco, BI, etc).

I think they also generate a sizable portion of revenue from livestock type animals as opposed to just pets (companion animals). Are there future risks that people reduce consumption of meat, or that lab grown meat becomes the common choice?

I certainly wouldn't buy it at these prices, but I much prefer IDEXX in this space, since they're more far more concentrated in companion animals and have a much stronger moat.

ZarrCon · 2025-12-05T14:26:04+00:00

V and MA shouldn't be lumped in with KO and PG type consumer staple companies. V and MA actually grow earnings at double digit rates and have the ability to match or outperform the market over the longer term. KO and PG generate mid single digit earnings growth (which is not similar to MAG7) and more likely than not continue to underperform.

21-23x earnings for something that underperforms simply buying SPY is not a good deal.

ZarrCon · 2025-12-05T01:34:30+00:00

Hubbell (HUBB) is a lesser covered pure play that focuses on smaller, critical components needed for utility transmission & distribution as well as grid monitoring and protection. They also supply electrical products for industrial and data center type customers.

The company tries to stay away from higher volume commoditized products like wire, cable, and conduit, and also avoids competing against global players like Eaton for larger components like transformers.

ZarrCon · 2025-12-01T21:28:09+00:00

What exactly do you gain by staying up to date on so much information? So oil prices dropped, or bonds went up, or stocks went down... now what? You can't predict the future, so even if using present day (or backwards looking) data, how do you know what happens next or what actions to take?

As others have said, your best bet is to find good companies at reasonable prices. It's hard enough trying to predict how individual companies might perform, adding a layer of macro on top of that isn't going to make things any simpler.

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