Techquity
Technology Investor, Fundamental Research
These five stocks should deliver great returns over the next five years because each trades well below its 10-year median P/E. S&P Global is at 26 times versus a 32 median, Fair Isaac at 39 versus 47, Mastercard at 29 versus 38, Microsoft at 25 versus 33 and ServiceNow at 59 versus 149. x.comÂ
S&P Global's ratings and indices could form an exceptionally profitable, wide-moat standalone business. Without its other units, their implied operating margin would be around 68%, among the market's top five; that makes further spinoffs sensible, though the separation is hypothetical. x.com x.comÂ
A ten-year low in forward P/E makes hyperscaler valuations look more than reasonable. Goldman Sachs' chart tracks Amazon, Alphabet, Meta, Microsoft and Oracle as a basket. x.comÂ
ServiceNow's growth looks likely to keep slowing, yet it trades at 50x 2027 GAAP EPS versus 20-25x for Microsoft, Google and Amazon growing as fast or faster. Subscription revenue grew about 21%, but the customer base is flat, so growth relies on upselling modules. Operating margin dipped and stock-based pay rose. Customers are mixed on its AI products and delay over price. Big SaaS firms near 20% growth often slide faster than expected, and its long-term targets look hard to reach. x.com x.comÂ
Microsoft, ServiceNow, Netflix, Meta Platforms, S&P Global, Amazon, Fair Isaac and Novo Nordisk look like a great opportunity today as high-quality companies, on the view that over the long term a stock's valuation tracks its earnings growth, so price should follow EPS. x.com x.com x.com x.com x.com x.com x.com x.comÂ
Meta, Microsoft, Nvidia and Amazon look like buys at forward P/Es of 18x, 20x, 20x and 25x respectively. x.comÂ
FICO's moat is starting to get disrupted, and the premium multiple holders once defended has not held up. Two years ago the stock traded at 80x EPS on the argument that a high-quality compounder with a moat deserved it; that multiple has since compressed by about 80%. FICO would need to rise 280% to regain its all-time high, and there is a good chance it never does. x.com x.com x.comÂ
Amazon, Microsoft, Meta and NVIDIA look cheap for their high expected 2026-2028 growth, per a Bank of America screen. They trade at 21.4x, 18.7x, 16.3x and 15.7x 2027 earnings respectively, versus about 21x forward earnings for the S&P 500. x.comÂ
S&P Global looks like a strong, fairly low-risk stock likely to beat the market from here, as it trades at 20x forward earnings, among its lowest levels in a decade, despite one of the world's strongest moats. With Moody's it forms one of the best duopolies anywhere, yet it has been lumped into the SaaS selloff. x.comÂ
Nvidia is the cheapest Magnificent Seven stock on a five-year PEG ratio at 0.72, below the 1.0 fair-value mark, while Microsoft at 1.33, Amazon at 1.81, Alphabet at 2.34, Apple at 2.43 and Tesla at 5.87 are expensive for their growth. That valuation dispersion is massive, and the market is mispricing some of them. x.com x.comÂ
Six stocks with giant moats could beat the market over the long term on their own: the tech oligopolists Meta, Microsoft and Amazon, and the financial toll booths S&P Global, Mastercard and FICO. Investing can be as simple as owning elite compounding machines. x.comÂ
