There's Only 4 Companies In The Entire US Market That Fit This Criteria👇
Hi there👋
I performed a midweek screen and found that there’s only 4 companies in the entire market that fit this quality screen.
Here’s the screen (that I did through Koyfin):
Market cap > $1B
Revenue estimates (2Y) > 30%
EBITDA estimates (3Y) > 20%
PEG < 1x
Note: This doesn’t include health care stocks
Note: Some links in this article are affiliate links meaning I may get commission if you do decide to purchase a product.
So it’s basically a screen to find extremely high growth stocks with lots of potential to grow EBITDA over the next 3 years, for a very cheap valuation (a PEG below 1x).
Here’s the 4 quality companies 👇
Credo Technology Group | CRDO
Introduction
CRDO specializes in hardware solutions that help large data centers and AI systems work optimally whilst using less energy. They do this by providing high quality connectivity solutions to improve power and cost efficiency. Their products are as follows:
HiWireActive Electrical Cables (AECs): Basically supercharged data cables that make it easier and faster for servers to connect - better alternatives to traditional optical cables and copper cables.
Pluggable Patch Panels (P3): Essentially make it easier for companies to manage network by upgrading or swapping out parts of the system without replacing everything.
Optical Devices: Helps send data using light instead of electricity which is much quicker and more energy efficient making it ideal to hyperscale AI, or 5G.
PCI Express & CXL Retimers: These are basically signals that keep signal strong even over very long distances.
Serdes IP & Chiplets: Special components that convert data between serial and parallel forms.
Line Card Solutions: Ensure efficient data flow across networks using devices such as retimers, gearboxes, and MACsex components
Financials
In the last quarter, revenue grew 64% to $72M with expectations of $115m-$125m revenue in the next quarter (which would be a 67% growth).
They have a net income margin of -5.9%, and a gross margin of 63.2%.
Non-GAAP net income per share is $0.07 (last year was just $0.01).
They have $383m worth of cash & cash equivalents.
Investment Thesis
CRDO provides a great opportunity to ride the AI, connectivity, and energy efficiency themes all in one go. With customers like Tesla, Amazon, and Microsoft, the quality of the products is clearly very high.
It’s suggested that CRDO’s technology takes up 75% less space than copper and increase power efficiency by 50%. As the demand for AI and data booms, the backend technology to improve product quality will become just as important.
CRDO is going through an inflection point with demand surging as customers are starting to realize the necessity of their products. They’re also nearing GAAP profitability which will likely be a big milestone.
They trade at just 0.69x PEG, with an EV/Sales of 17.2x. Compare this to competitors like MRVL who trade at 8x PEG and CRDO appears a great deal.
Before we look at the other 3 stocks, I just want to take a moment to remind you that I’m offering a 20% discount to my paid tier. That’s be just $14 a month. For this you get access to my full archive and all of my deep dives (1 per week)
Please do consider subscribing here👇
NVIDIA Corporation | NVDA
Introduction
NVDA has the moat of all moats in the GPU and AI computing industry. They’re dominant in the AV space, AI healthcare, gaming, and have a nice foothold in the robotics industry.
Financials
Revenue has increased 93.6% YoY to $113.3 billion in the last 12 months alone with data center revenue driving most of this growth (up 112% YoY).
Gross profit margins have touched 74.5%.
GAAP EPS is up to $0.78 which is a 111% increase YoY and 16% increase QoQ.
The outlook provided shows a slight margin contraction to 73% due to Blackwell chip ramp up. DeepSeek news may pressure this slightly more.
Investment Thesis
The bullish thesis for NVDA is very extensive so excuse the brief summary here. These articles are meant for interesting screens, and introduction of new stocks, rather than deep dives. I’ll focus here on the side of the argument that DeepSeek won’t affect NVDA.
Firstly, it’ll take some time for the US companies to train models like DeepSeek have so short term the demand shouldn’t be too different to the lofty expectations.
DeepSeek’s AI innovation should lead to a wider development of AI (instead of just huge CapEx amongst the biggest companies in the world). This should cancel out the risks of individual company lowered demand due to more efficient models meaning demand for NVDA chips will remain very high since they are the best chips globally.
My Worry👇
However, I do think the DeepSeek news definitely opens up some questions with NVDA which will put some cracks into the above narrative.
If you want to see my opinion, have a read of this:
First Solar | FSLR
Introduction
FSLR are a leading solar technology company and provider of solar panels. They are headquartered in the US, and design thin-film photovoltaic panels. FSLR are differentiated from other solar panel manufacturers in that they use Cadmium Telluride (as opposed to crystalline silicon) which is generally cheaper, more efficient, and more scalable.
Financials
Revenues just hit $3.85B LTM which is just 10.8% growth.
FSLR has a 46% gross margin, 48% EBITDA margin, and 35.3% net margin.
$1.3 billion in cash and $700 million in net cash.
Investment Thesis
The vast majority of solar panels are made using crystalline silicon, but Cadmium Telluride (which FSLR use and are the massive leaders in) have some key benefits. Firstly, they have ~9 years more useful life, less efficiency loss to weather, and uses 98% less semiconductor material than typical counterparts.
FSLR purchased Evolar which use perovskite. Combined Cadmium Telluride with Peovskite could mean high levels of efficiencies that we haven’t seen before. This is likely way off though (earliest 2026/2027).
Trump’s “buy American” philosophy will be bullish for FSLR. Most competitors are based in China and use crystalline silicon. FSLR has lost almost 45% since June 2024 despite fundamentals not dropping too much.
At a PEG of just 0.26, estimated revenue growth (2Y) of 30.6% and EBITDA growth of 56% CAGR estimated, FSLR seems to have a good amount to run if sentiment around solar stocks improves.
TAL Education Group | TAL
Introduction
TAL is a Chinese education company that provides tutoring for students from preschool to high school. TAL has 2 main segments; learning services (Peiyou small classes make up most of revenue) and content solutions (smart learning devices make up most of revenue).
Financials
Net revenues reached $606.4 million (compared to $375 million in PY).
Net income is now positive with $23.1 million compared to PY which was a loss of $23.9 million.
EPS reached $0.04 and cash and cash equivalents increased ~$800 million from PY to $3.8 billion.
Investment Thesis
TAL have really embraced AI far more than competitors like EDU and GOTU. Their XBook is powered by a LLM which has key integrated AI technologies. This has huge potential to cut costs, raise margins, and optimize performance, sales, and retention through more personalization.
TAL trades at 2.0x for 62.4% revenue growth which is almost unheard of, though we have to apply a discount since operations are based in China.
That’s all for today
I do hope you enjoyed this screen. If there’s any feedback or additional information that you think would be necessary, please do reach out to me and let me know or leave a comment below.
Next deep dive is already being prepared…any guesses on what it will be?
FSLR is highly undervalued right now. My TOP 1 pick until 2030.