STA Research · Long-term investing
10 companies.
One long-term portfolio.
Explore the STA Research ten-stock portfolio: the business case, financial strength, earnings quality and valuation assumptions behind every holding. Track the long-term model and compare a fresh $1,000-per-stock investment from June 2008.
Hypothetical historical illustration, not an audited STA Research track record. Rounded historical inputs; dividends, taxes, fees and currency changes excluded. Prices are a dated snapshot, not a live feed.
Portfolio performance
Each position starts with US$1,000. All prices and targets are in USD; TSM uses the U.S. ADR.
| Company | Reference date | Entry price* | Latest close | Holding value | Gain · USD | Gain · % | 12m target | Target upside |
|---|---|---|---|---|---|---|---|---|
| NVIDIANVDA | 2008-05-30Pre-June reference | 0.6175 | $239.24 | $387,433.20 | $386,433.20 | +38,643.32% | $328.72 | +37.40% |
| AppleAAPL | 2008-05-30Pre-June reference | 6.7400 | $333.63 | $49,500.00 | $48,500.00 | +4,850.00% | $328.09 | -1.66% |
| MicrosoftMSFT | 2008-05-30Pre-June reference | 28.3200 | $529.30 | $18,689.97 | $17,689.97 | +1,769.00% | $585.61 | +10.64% |
| AmazonAMZN | 2008-05-30Pre-June reference | 4.0800 | $256.29 | $62,816.18 | $61,816.18 | +6,181.62% | $330.59 | +28.99% |
| BroadcomAVGO | 2009-08-06IPO first-day close | 1.6180 | $375.81 | $232,268.23 | $231,268.23 | +23,126.82% | $531.85 | +41.52% |
| AlphabetGOOGL | 2008-05-30Pre-June reference | 14.6600 | $347.68 | $23,716.23 | $22,716.23 | +2,271.62% | $429.36 | +23.49% |
| Meta PlatformsMETA | 2012-05-18IPO first-day close | 38.2300 | $738.88 | $19,327.23 | $18,327.23 | +1,832.72% | $794.96 | +7.59% |
| TeslaTSLA | 2010-06-29IPO first-day close | 1.5927 | $380.68 | $239,020.51 | $238,020.51 | +23,802.05% | $395.83 | +3.98% |
| TSMCTSM | 2008-05-30Pre-June reference | 11.3400 | $482.30 | $42,530.86 | $41,530.86 | +4,153.09% | $555.01 | +15.08% |
| Eli LillyLLY | 2008-05-30Pre-June reference | 48.1400 | $1,157.49 | $24,044.25 | $23,044.25 | +2,304.42% | $1,329.00 | +14.82% |
| Total portfolio | $10,000.00 invested | $1,099,346.66 | $1,089,346.66 | +10,893.47% | Consensus targets are estimates | |||
*Entry prices are normalized to the current share basis. June 1, 2008 was a Sunday, so May 30 closing prices are used as the pre-June reference. AVGO, TSLA and META use their first public trading-day closes. See the source notes below.
What $10,000 invested in January 2026 looks like today
A separate equal-weight comparison starts with $1,000 in every holding at the January 2, 2026 close, the first trading day of the year. This reference date is a modeling choice; actual purchase prices may differ. It does not reset the original long-term holdings.
| Company | Jan. 2 close · USD | $1,000 holding value | Dollar gain | Price return |
|---|---|---|---|---|
| NVIDIANVDA | $188.85 | $1,266.83 | +$266.83 | +26.68% |
| AppleAAPL | $271.01 | $1,231.06 | +$231.06 | +23.11% |
| MicrosoftMSFT | $472.94 | $1,119.17 | +$119.17 | +11.92% |
| AmazonAMZN | $226.50 | $1,131.52 | +$131.52 | +13.15% |
| BroadcomAVGO | $347.62 | $1,081.09 | +$81.09 | +8.11% |
| AlphabetGOOGL | $315.15 | $1,103.22 | +$103.22 | +10.32% |
| Meta PlatformsMETA | $650.41 | $1,136.02 | +$136.02 | +13.60% |
| TeslaTSLA | $438.07 | $868.99 | -$131.01 | -13.10% |
| TSMCTSM | $319.61 | $1,509.03 | +$509.03 | +50.90% |
| Eli LillyLLY | $1,080.36 | $1,071.39 | +$71.39 | +7.14% |
Source: Yahoo Finance daily history, split-adjusted Close, rather than dividend-adjusted Adj Close. October 6, 2026 closes are the comparison endpoint. Fractional shares, no rebalancing; dividends, fees, taxes and FX excluded. Portfolio return weights equal initial dollars, rather than averaging current position weights. The January comparison stays tied to the dated snapshot while the separate scenario calculator changes the long-term illustration.
What the portfolio owns today
Equal starting allocations become unequal holdings when performance diverges.
NVDA
35.2%
TSLA
21.7%
AVGO
21.1%
AMZN
5.7%
AAPL
4.5%
TSM
3.9%
LLY
2.2%
GOOGL
2.2%
META
1.8%
MSFT
1.7%
Portfolio perspective
Growth has created concentration.
The three largest modeled positions account for 78.1% of current value. NVIDIA, Broadcom and Tesla have grown far beyond their original allocations.
Several holdings share the same AI investment cycle. Cloud providers can drive semiconductor demand, but a spending slowdown could affect multiple positions at once. Lilly adds different business drivers; it is a small part of the buy-and-hold value.
Analyst targets measure possible future prices. Historical gains measure the change since the entry reference. They answer different questions.
Portfolio construction and stress tests
At equal starting weights, the broad sector mix is 50% information technology, 20% communication services, 20% consumer discretionary and 10% healthcare. Five information-technology holdings do not provide five independent risk exposures: NVIDIA, Broadcom and TSMC share the semiconductor cycle, while their cloud customers include other holdings.
A 30% fall in a position weighing 35% of current value reduces portfolio value by 10.5%, assuming the other holdings are unchanged. A 20% decline across all holdings reduces portfolio value by 20%, irrespective of the number of stocks. These are arithmetic stress tests, not probability estimates. Consider both individual position limits and the combined exposure to AI capital spending.
The historical basket is selected with today’s successful companies in view and is subject to selection and survivorship bias. It is not a benchmark-relative manager-performance record. Rebalancing rules, an investable benchmark and total-return data would be needed for a robust performance evaluation.
The research behind each holding
Business model, latest results, catalysts, valuation context and risks. Open a company to read the analysis.
NVDANVIDIASemiconductors
61 analysts · Target range $180.00–$515.00 · Targets dated 2026-10-06 · Modeled share equivalents: 1,619.4332
Industry and competitive position
The investment case rests on the value of an integrated computing platform: accelerators, networking, systems and software. Switching costs can come from developer tooling and the cost of rewriting applications. The analytical question is whether inference demand expands fast enough to offset eventual price competition. Custom silicon can serve narrow workloads even when a general-purpose platform remains valuable; market growth and market share must be modeled separately.
Profitability and earnings quality
Fiscal Q2 2027 operating income of $63.734 billion on revenue of $96.221 billion gives a derived operating margin of 66.2%. Data Center accounted for about 92.5% of revenue. GAAP EPS of $2.46 exceeded non-GAAP EPS of $2.22, illustrating why GAAP is not always the conservative earnings measure. Equity investment gains require normalization. Neither quarterly EPS measure should be multiplied by four and described as trailing earnings.
Cash flow, liquidity and capital allocation
Quarterly operating cash flow was $24.077 billion. Subtracting $2.677 billion of property, equipment and intangible purchases and $59 million of related principal payments produces approximately $21.341 billion of free cash flow, a 22.2% cash-flow margin. Cash and marketable debt securities of $56.586 billion exceeded interest-bearing debt of $33.366 billion by $23.220 billion. Equity securities are excluded from that liquid-debt comparison. Receivable and inventory absorption explains why cash conversion trails accounting profit.
Valuation judgment and thesis tests
Use normalized earnings and a multistage equity cash-flow model as cross-checks. A premium multiple requires sustained earnings delivery after the extraordinary infrastructure buildout; extrapolating the latest growth rate indefinitely would exaggerate terminal value. The $6 first-year equity cash-flow assumption below is deliberately above the latest quarter’s annualized cash generation and therefore requires cash conversion to improve. Review receivable collection, inventory obsolescence, customer financing and dilution before accepting that recovery. A thesis break would be slowing end-customer monetization combined with falling margins and growing working capital. Export controls and alternative chips should be tested as correlated demand and pricing shocks, rather than isolated footnotes.
Catalysts and portfolio role
Watch conversion of AI infrastructure demand into shipments, new-platform execution and gross margins. Continued customer investment would support earnings growth; slower deployment would challenge the thesis. This holding shares exposure to growth expectations and equity discount rates with other portfolio companies. Review its position size using current value, rather than its original $1,000 allocation.
Valuation scenarios · editorial assumptions
These are sensitivity illustrations, not company guidance, consensus estimates or official STA Research targets. EPS is assumed for the next 12 months; multiples are selected to test growth, duration and risk. An earnings multiple is a cross-check, not a complete estimate of intrinsic value.
| Case | Assumed EPS | Assumed P/E | Implied price | Vs. snapshot |
|---|---|---|---|---|
| Bear | $9.00 | 25.0× | $225.00 | -6.0% |
| Base | $11.00 | 30.0× | $330.00 | +37.9% |
| Bull | $13.00 | 35.0× | $455.00 | +90.2% |
Five-year equity cash-flow valuation
Assume first-year FCFE of $6.00 per share, 22.0% annual growth in years 2–5, 12.0% cost of equity and 3.0% perpetual growth after year 5. This is normalized distributable cash after reinvestment, debt service and net borrowing, under a stable diluted share basis. It is an assumed future cash path; company-reported free cash flow is a separate historical measure.
Illustrative present value per share $118.33-50.5% versus the dated closing price.
Default assumptions · terminal growth fixed at 3.0% for the interactive calculation.
Discount-rate and terminal-growth sensitivity
The table uses the default cash-flow assumptions. Columns show terminal growth; rows show cost of equity. It remains fixed when interactive inputs change.
| Cost of equity | 2% terminal growth | 3% terminal growth | 4% terminal growth |
|---|---|---|---|
| 11.0% | $122.34 | $134.50 | $150.14 |
| 12.0% | $108.95 | $118.33 | $130.06 |
| 13.0% | $98.02 | $105.44 | $114.49 |
For an illustrative CAPM decomposition only, assume a 4% risk-free rate and 5% equity risk premium: the default discount rate corresponds to beta 1.60. These are modeling assumptions, not current Treasury yields or measured betas. Terminal value dominates many growth valuations; use a margin of safety and compare multiple methods.
Reverse cash-flow test: the dated price would require first-year FCFE of $12.13 per share under these growth and discount assumptions. The cash-flow and earnings-multiple scenarios differ because they assume different cash conversion and earnings persistence; their outputs should not be averaged into a price target.
AAPLAppleConsumer technology
44 analysts · Target range $215.00–$405.00 · Targets dated 2026-10-06 · Modeled share equivalents: 148.3680
Industry and competitive position
Apple’s ecosystem combines device demand with services attached to its installed base. A useful industry analysis separates replacement-cycle revenue from recurring monetization and assesses how distribution control translates into pricing power. AI features can support upgrades, but an attractive product announcement alone does not establish incremental cash returns. Regulation of app distribution could change the economics of services even if device loyalty stays strong.
Profitability and earnings quality
Fiscal Q3 2026 gross margin was 50.1%, including about two percentage points from tariff refunds. Removing that disclosed benefit gives an approximate 48.1% normalized gross margin. Similarly, $2.02 EPS less the $0.11 refund benefit is $1.91. These are limited adjustments, not a complete non-GAAP earnings reconstruction. Operating income of $35.695 billion divided by $109.417 billion of sales gives a 32.6% operating margin. Services contributed about 28.1% of quarterly sales.
Cash flow, liquidity and capital allocation
Nine-month operating cash flow of $116.996 billion less $6.799 billion of capital purchases yields $110.197 billion of simple free cash flow. Cash conversion was 1.15 times nine-month net income, before deducting stock compensation’s economic cost. Current assets divided by current liabilities were approximately 1.00 times. Cash plus current and non-current marketable securities totaled $146.517 billion against $84.344 billion of commercial paper and term debt. This supports funding flexibility; it does not make every security equivalent to immediately available cash.
Valuation judgment and thesis tests
A mature platform should be valued on sustainable earnings, cash generation and the durability of its reinvestment opportunities. Buybacks can raise EPS without equivalent business growth and can inflate return on equity by shrinking the denominator. Prefer operating return measures and per-share cash flow to a headline ROE comparison. The $10 first-year equity cash-flow assumption is near a simple annualization of the nine-month cash-flow run rate, but seasonality and working capital make that only a plausibility check. The consensus target is below the current quote despite a Buy rating. The model’s base earnings multiple therefore needs strong recurring services economics to justify it. Watch device demand, services take rates, China exposure, inventory and recurring margins after tariff refunds fade.
Catalysts and portfolio role
Monitor iPhone replacement demand, Services growth and adoption of new AI features. Growth that outpaces expectations could justify higher targets, while weaker device demand would reduce operating leverage. This holding shares exposure to growth expectations and equity discount rates with other portfolio companies. Review its position size using current value, rather than its original $1,000 allocation.
Valuation scenarios · editorial assumptions
These are sensitivity illustrations, not company guidance, consensus estimates or official STA Research targets. EPS is assumed for the next 12 months; multiples are selected to test growth, duration and risk. An earnings multiple is a cross-check, not a complete estimate of intrinsic value.
| Case | Assumed EPS | Assumed P/E | Implied price | Vs. snapshot |
|---|---|---|---|---|
| Bear | $8.00 | 28.0× | $224.00 | -32.9% |
| Base | $9.00 | 32.0× | $288.00 | -13.7% |
| Bull | $10.00 | 36.0× | $360.00 | +7.9% |
Five-year equity cash-flow valuation
Assume first-year FCFE of $10.00 per share, 8.0% annual growth in years 2–5, 9.0% cost of equity and 3.0% perpetual growth after year 5. This is normalized distributable cash after reinvestment, debt service and net borrowing, under a stable diluted share basis. It is an assumed future cash path; company-reported free cash flow is a separate historical measure.
Illustrative present value per share $196.83-41.0% versus the dated closing price.
Default assumptions · terminal growth fixed at 3.0% for the interactive calculation.
Discount-rate and terminal-growth sensitivity
The table uses the default cash-flow assumptions. Columns show terminal growth; rows show cost of equity. It remains fixed when interactive inputs change.
| Cost of equity | 2% terminal growth | 3% terminal growth | 4% terminal growth |
|---|---|---|---|
| 8.0% | $203.70 | $237.04 | $287.04 |
| 9.0% | $173.88 | $196.83 | $228.96 |
| 10.0% | $151.54 | $168.13 | $190.26 |
For an illustrative CAPM decomposition only, assume a 4% risk-free rate and 5% equity risk premium: the default discount rate corresponds to beta 1.00. These are modeling assumptions, not current Treasury yields or measured betas. Terminal value dominates many growth valuations; use a margin of safety and compare multiple methods.
Reverse cash-flow test: the dated price would require first-year FCFE of $16.95 per share under these growth and discount assumptions. The cash-flow and earnings-multiple scenarios differ because they assume different cash conversion and earnings persistence; their outputs should not be averaged into a price target.
MSFTMicrosoftCloud & enterprise software
56 analysts · Target range $440.00–$870.00 · Targets dated 2026-10-06 · Modeled share equivalents: 35.3107
Industry and competitive position
Microsoft combines enterprise software subscriptions with cloud infrastructure. Its analytical advantage is distribution through existing customer relationships; the critical test is whether AI products add profitable usage or substitute for current offerings. Software and infrastructure have different capital needs, so consolidated revenue growth can conceal a changing mix. Backlog must be assessed for duration, customer concentration, cancellation risk and conversion into cash.
Profitability and earnings quality
Fiscal 2026 operating income of $155.237 billion on $331.839 billion revenue gives a 46.8% operating margin. Reported annual EPS was $17.95 versus $17.28 after the company’s OpenAI adjustment. That company adjustment does not eliminate every unusual item: management also identified discrete quarterly benefits. For valuation, use consistent accounting across fiscal periods and separately identify investment gains, restructuring and dilution.
Cash flow, liquidity and capital allocation
Fiscal-year operating cash flow was $182.935 billion and property/equipment additions were $115.948 billion. Simple free cash flow was therefore $66.987 billion, or 20.2% of sales. Cash conversion before capital spending was 1.37 times net income, while cash capital spending consumed 63.4% of operating cash flow. Liquid resources of $76.843 billion exceeded current and long-term debt of $40.294 billion. Finance leases and other funding obligations also matter; cash purchases alone understate total infrastructure commitments.
Valuation judgment and thesis tests
An illustrative ROIC proxy is 35.6%: operating income multiplied by an assumed 80% after-tax factor, divided by average debt plus equity less cash and short-term investments. The denominator averages June 2025 and June 2026 balances; this simplified measure excludes lease adjustments and does not capitalize research. Compare its direction with the required return, rather than treating it as precise economic ROIC. The $9 first-year equity cash-flow assumption is close to annual simple free cash flow per diluted share, under a no-net-borrowing assumption. Higher future depreciation, energy costs or weaker utilization could reduce that cash result. The base case needs recurring software cash flows to support Azure investment. Monitor cloud margins, paid adoption, capital commitments and cash returns on incremental capacity.
Catalysts and portfolio role
Watch Azure capacity, AI revenue conversion and paid software adoption. The key question is whether revenue and cash generation scale with the investment needed to support customer demand. This holding shares exposure to growth expectations and equity discount rates with other portfolio companies. Review its position size using current value, rather than its original $1,000 allocation.
Valuation scenarios · editorial assumptions
These are sensitivity illustrations, not company guidance, consensus estimates or official STA Research targets. EPS is assumed for the next 12 months; multiples are selected to test growth, duration and risk. An earnings multiple is a cross-check, not a complete estimate of intrinsic value.
| Case | Assumed EPS | Assumed P/E | Implied price | Vs. snapshot |
|---|---|---|---|---|
| Bear | $16.00 | 25.0× | $400.00 | -24.4% |
| Base | $18.00 | 30.0× | $540.00 | +2.0% |
| Bull | $20.00 | 35.0× | $700.00 | +32.3% |
Five-year equity cash-flow valuation
Assume first-year FCFE of $9.00 per share, 15.0% annual growth in years 2–5, 10.0% cost of equity and 3.0% perpetual growth after year 5. This is normalized distributable cash after reinvestment, debt service and net borrowing, under a stable diluted share basis. It is an assumed future cash path; company-reported free cash flow is a separate historical measure.
Illustrative present value per share $188.62-64.4% versus the dated closing price.
Default assumptions · terminal growth fixed at 3.0% for the interactive calculation.
Discount-rate and terminal-growth sensitivity
The table uses the default cash-flow assumptions. Columns show terminal growth; rows show cost of equity. It remains fixed when interactive inputs change.
| Cost of equity | 2% terminal growth | 3% terminal growth | 4% terminal growth |
|---|---|---|---|
| 9.0% | $195.16 | $221.71 | $258.88 |
| 10.0% | $169.42 | $188.62 | $214.22 |
| 11.0% | $149.44 | $163.84 | $182.36 |
For an illustrative CAPM decomposition only, assume a 4% risk-free rate and 5% equity risk premium: the default discount rate corresponds to beta 1.20. These are modeling assumptions, not current Treasury yields or measured betas. Terminal value dominates many growth valuations; use a margin of safety and compare multiple methods.
Reverse cash-flow test: the dated price would require first-year FCFE of $25.26 per share under these growth and discount assumptions. The cash-flow and earnings-multiple scenarios differ because they assume different cash conversion and earnings persistence; their outputs should not be averaged into a price target.
AMZNAmazonCloud, retail & advertising
59 analysts · Target range $230.00–$405.00 · Targets dated 2026-10-06 · Modeled share equivalents: 245.0980
Industry and competitive position
Amazon’s retail network, AWS and advertising should be analyzed as separate economic engines. Retail scale can lower fulfillment cost, while AWS economics depend on compute utilization and customer retention. A sum-of-the-parts framework can expose these differences, but shared expenses and capital spending must be allocated before adding segment values. Internal chips can improve cost efficiency while also introducing execution and supply-chain risk.
Profitability and earnings quality
Q2 operating income of $27.5 billion divided by sales of $200.6 billion gives a 13.7% consolidated operating margin. AWS generated $16.6 billion of operating income on $42.2 billion sales, a 39.3% segment margin and about 60.4% of group operating income. Net income included $53.4 billion of non-operating pre-tax income, primarily from Anthropic investments. Applying an earnings multiple directly to that quarterly net income would confuse investment marks with recurring operations.
Cash flow, liquidity and capital allocation
Trailing operating cash flow was $161.4 billion while reported free cash flow was negative $7.6 billion. Their difference implies about $169.0 billion of net cash capital spending under the company’s definition, exceeding operating cash generation. A negative current cash flow can coexist with valuable growth investment, but only if incremental returns justify the cash committed. Track lease-funded capacity, debt maturities, supplier terms and the timing of cash receipts as well as headline operating cash flow.
Valuation judgment and thesis tests
Use a multistage model with explicit recovery from the current cash deficit, and cross-check normalized earnings against segment operating profit. A perpetuity of the current negative free cash flow is not an appropriate estimate of a growing enterprise. Conversely, replacing it with a large positive cash assumption without explaining the bridge is equally weak. The $5 first-year equity cash flow per share below is an assumed recovery outcome, not reported free cash flow: it requires reinvestment intensity to fall or operating cash generation to rise substantially. Residual income offers an additional lens when near-term cash flow is depressed. Test a slower AWS growth path, reduced retail margin and sustained investment spending together. Cash recovery, rather than an unrealized investment gain, is the key evidence needed to strengthen the valuation case.
Catalysts and portfolio role
Monitor AWS growth, AI capacity utilization and retail operating margins. Cash generation improving after the investment cycle would strengthen the case for a higher valuation. This holding shares exposure to growth expectations and equity discount rates with other portfolio companies. Review its position size using current value, rather than its original $1,000 allocation.
Valuation scenarios · editorial assumptions
These are sensitivity illustrations, not company guidance, consensus estimates or official STA Research targets. EPS is assumed for the next 12 months; multiples are selected to test growth, duration and risk. An earnings multiple is a cross-check, not a complete estimate of intrinsic value.
| Case | Assumed EPS | Assumed P/E | Implied price | Vs. snapshot |
|---|---|---|---|---|
| Bear | $6.00 | 28.0× | $168.00 | -34.4% |
| Base | $8.00 | 35.0× | $280.00 | +9.3% |
| Bull | $10.00 | 40.0× | $400.00 | +56.1% |
Five-year equity cash-flow valuation
Assume first-year FCFE of $5.00 per share, 20.0% annual growth in years 2–5, 11.0% cost of equity and 3.0% perpetual growth after year 5. This is normalized distributable cash after reinvestment, debt service and net borrowing, under a stable diluted share basis. It is an assumed future cash path; company-reported free cash flow is a separate historical measure.
Illustrative present value per share $105.70-58.8% versus the dated closing price.
Default assumptions · terminal growth fixed at 3.0% for the interactive calculation.
Discount-rate and terminal-growth sensitivity
The table uses the default cash-flow assumptions. Columns show terminal growth; rows show cost of equity. It remains fixed when interactive inputs change.
| Cost of equity | 2% terminal growth | 3% terminal growth | 4% terminal growth |
|---|---|---|---|
| 10.0% | $109.33 | $121.98 | $138.84 |
| 11.0% | $96.22 | $105.70 | $117.90 |
| 12.0% | $85.75 | $93.07 | $102.23 |
For an illustrative CAPM decomposition only, assume a 4% risk-free rate and 5% equity risk premium: the default discount rate corresponds to beta 1.40. These are modeling assumptions, not current Treasury yields or measured betas. Terminal value dominates many growth valuations; use a margin of safety and compare multiple methods.
Reverse cash-flow test: the dated price would require first-year FCFE of $12.12 per share under these growth and discount assumptions. The cash-flow and earnings-multiple scenarios differ because they assume different cash conversion and earnings persistence; their outputs should not be averaged into a price target.
AVGOBroadcomSemiconductors & infrastructure software
50 analysts · Target range $215.88–$715.00 · Targets dated 2026-10-06 · Modeled share equivalents: 618.0470
Industry and competitive position
Broadcom combines custom compute and networking with infrastructure software. Custom silicon offers a route to AI adoption different from merchant accelerators, but both depend on large customers’ deployment budgets. Competitive analysis should distinguish design wins, actual production volumes and contract economics. Software adds recurring cash generation, though renewal behavior and integration expenses still need scrutiny.
Profitability and earnings quality
Fiscal Q3 2026 revenue of $29.591 billion and GAAP operating income of $15.955 billion imply a 53.9% operating margin. The non-GAAP margin was 67.9%, showing a material reconciliation gap. EPS was $2.68 on a GAAP basis and $3.32 on a non-GAAP basis. Acquisition amortization and stock compensation require consistent treatment when comparing peers; an adjusted earnings measure does not remove their economic relevance.
Cash flow, liquidity and capital allocation
Quarterly free cash flow of approximately $13.7 billion represented about 46.3% of revenue. Cash of $23.975 billion compared with $59.419 billion of short- and long-term debt implies approximately $35.444 billion of net debt before lease adjustments. Current assets/current liabilities were 2.50 times. Goodwill and intangible assets together accounted for roughly two-thirds of total assets, so asset backing and acquisition execution deserve attention alongside cash conversion.
Valuation judgment and thesis tests
A normalized earnings multiple and an equity cash-flow model are useful cross-checks, with debt service and future acquisition needs included in the cash forecast. The $11 first-year equity cash-flow assumption is near a simple four-quarter extension of recent quarterly free cash flow per share; that is a reasonableness check, not a full-year forecast. Strong current margins should not be assumed through every semiconductor cycle. Stress customer program delays, weaker software renewals and a lower valuation multiple at the same time. Assess whether incremental capital produces returns above its cost after purchase-price accounting and research investment. The thesis improves if design wins translate into durable cash receipts and debt reduction; it weakens if cash conversion deteriorates while concentration and financial commitments rise.
Catalysts and portfolio role
Watch custom accelerator programs, networking demand and software cash generation. Sustained revenue growth with strong cash conversion would support the long-term thesis. This holding shares exposure to growth expectations and equity discount rates with other portfolio companies. Review its position size using current value, rather than its original $1,000 allocation.
Valuation scenarios · editorial assumptions
These are sensitivity illustrations, not company guidance, consensus estimates or official STA Research targets. EPS is assumed for the next 12 months; multiples are selected to test growth, duration and risk. An earnings multiple is a cross-check, not a complete estimate of intrinsic value.
| Case | Assumed EPS | Assumed P/E | Implied price | Vs. snapshot |
|---|---|---|---|---|
| Bear | $12.00 | 25.0× | $300.00 | -20.2% |
| Base | $15.00 | 30.0× | $450.00 | +19.7% |
| Bull | $18.00 | 35.0× | $630.00 | +67.6% |
Five-year equity cash-flow valuation
Assume first-year FCFE of $11.00 per share, 22.0% annual growth in years 2–5, 12.0% cost of equity and 3.0% perpetual growth after year 5. This is normalized distributable cash after reinvestment, debt service and net borrowing, under a stable diluted share basis. It is an assumed future cash path; company-reported free cash flow is a separate historical measure.
Illustrative present value per share $216.94-42.3% versus the dated closing price.
Default assumptions · terminal growth fixed at 3.0% for the interactive calculation.
Discount-rate and terminal-growth sensitivity
The table uses the default cash-flow assumptions. Columns show terminal growth; rows show cost of equity. It remains fixed when interactive inputs change.
| Cost of equity | 2% terminal growth | 3% terminal growth | 4% terminal growth |
|---|---|---|---|
| 11.0% | $224.29 | $246.59 | $275.25 |
| 12.0% | $199.73 | $216.94 | $238.45 |
| 13.0% | $179.71 | $193.30 | $209.91 |
For an illustrative CAPM decomposition only, assume a 4% risk-free rate and 5% equity risk premium: the default discount rate corresponds to beta 1.60. These are modeling assumptions, not current Treasury yields or measured betas. Terminal value dominates many growth valuations; use a margin of safety and compare multiple methods.
Reverse cash-flow test: the dated price would require first-year FCFE of $19.06 per share under these growth and discount assumptions. The cash-flow and earnings-multiple scenarios differ because they assume different cash conversion and earnings persistence; their outputs should not be averaged into a price target.
GOOGLAlphabetSearch, advertising & cloud
61 analysts · Target range $340.00–$515.00 · Targets dated 2026-10-06 · Modeled share equivalents: 68.2128
Industry and competitive position
Alphabet’s thesis combines the economics of Search and YouTube with Cloud and AI infrastructure. AI can expand queries while also changing the cost of serving them and the placement of advertising. Analyze revenue per interaction, traffic acquisition cost and compute cost together. Cloud growth must be evaluated separately from advertising so that changes in revenue mix do not masquerade as uniform improvement in profitability.
Profitability and earnings quality
Q2 2026 operating margin was 34.0%, with $40.770 billion operating income on $119.796 billion revenue. Reported EPS of $9.11 included a $6.26 benefit from equity securities gains. Subtracting that disclosed effect gives $2.85 per share, a limited normalization rather than a full adjusted earnings measure. Cloud operating income of $8.814 billion on $24.768 billion revenue implies a 35.6% segment margin.
Cash flow, liquidity and capital allocation
Trailing operating cash flow of $185.675 billion less capital purchases of $132.402 billion produced $53.273 billion free cash flow. The latest quarter alone had a $5.855 billion cash deficit under that definition. Current assets/current liabilities were 2.72 times, but long-term debt was $98.165 billion and new equity financing introduces dilution considerations. Strong liquidity and rapid infrastructure investment therefore need to be assessed together.
Valuation judgment and thesis tests
Use recurring operating earnings and a multistage cash model rather than a multiple of investment-inflated EPS. A sum-of-the-parts check should subtract corporate costs and value speculative businesses conservatively. The $8 first-year equity cash-flow assumption below requires a recovery above the recent trailing cash flow per share; it is contingent on returns from new infrastructure and the timing of capital purchases. For FCFF valuation, preferred capital and debt must be deducted and eligible non-operating assets added separately. The per-share FCFE illustration avoids that enterprise-value bridge but assumes a stable diluted share basis. Search substitution, regulation, rising depreciation and weak cash returns could simultaneously pressure earnings and the multiple. Look for evidence that AI monetization covers its incremental cost before giving growth the same valuation as legacy advertising.
Catalysts and portfolio role
Monitor Search monetization as AI interfaces evolve, enterprise Cloud demand and returns on infrastructure spending. Revenue growth translating into durable cash flow would support the thesis. This holding shares exposure to growth expectations and equity discount rates with other portfolio companies. Review its position size using current value, rather than its original $1,000 allocation.
Valuation scenarios · editorial assumptions
These are sensitivity illustrations, not company guidance, consensus estimates or official STA Research targets. EPS is assumed for the next 12 months; multiples are selected to test growth, duration and risk. An earnings multiple is a cross-check, not a complete estimate of intrinsic value.
| Case | Assumed EPS | Assumed P/E | Implied price | Vs. snapshot |
|---|---|---|---|---|
| Bear | $10.00 | 22.0× | $220.00 | -36.7% |
| Base | $13.00 | 27.0× | $351.00 | +1.0% |
| Bull | $16.00 | 32.0× | $512.00 | +47.3% |
Five-year equity cash-flow valuation
Assume first-year FCFE of $8.00 per share, 16.0% annual growth in years 2–5, 10.0% cost of equity and 3.0% perpetual growth after year 5. This is normalized distributable cash after reinvestment, debt service and net borrowing, under a stable diluted share basis. It is an assumed future cash path; company-reported free cash flow is a separate historical measure.
Illustrative present value per share $172.89-50.3% versus the dated closing price.
Default assumptions · terminal growth fixed at 3.0% for the interactive calculation.
Discount-rate and terminal-growth sensitivity
The table uses the default cash-flow assumptions. Columns show terminal growth; rows show cost of equity. It remains fixed when interactive inputs change.
| Cost of equity | 2% terminal growth | 3% terminal growth | 4% terminal growth |
|---|---|---|---|
| 9.0% | $178.90 | $203.34 | $237.54 |
| 10.0% | $155.23 | $172.89 | $196.45 |
| 11.0% | $136.86 | $150.11 | $167.15 |
For an illustrative CAPM decomposition only, assume a 4% risk-free rate and 5% equity risk premium: the default discount rate corresponds to beta 1.20. These are modeling assumptions, not current Treasury yields or measured betas. Terminal value dominates many growth valuations; use a margin of safety and compare multiple methods.
Reverse cash-flow test: the dated price would require first-year FCFE of $16.09 per share under these growth and discount assumptions. The cash-flow and earnings-multiple scenarios differ because they assume different cash conversion and earnings persistence; their outputs should not be averaged into a price target.
METAMeta PlatformsDigital advertising & social platforms
63 analysts · Target range $580.00–$1,000.00 · Targets dated 2026-10-06 · Modeled share equivalents: 26.1575
Industry and competitive position
Meta’s platform economics depend on engagement, advertiser outcomes and its ability to monetize attention. AI ranking may improve relevance and conversion, but cost per useful interaction is the more informative investment measure. Competitive analysis should test both advertiser switching and user substitution. Experimental products should be valued separately from the established advertising franchise, with explicit spending and success assumptions.
Profitability and earnings quality
Q2 revenue of $60.801 billion and operating income of $18.775 billion give a 30.9% operating margin, down from about 43.0% a year earlier. Costs rose faster than sales. Legal charges can explain part of the change, but recurring research and infrastructure expenses still reduce profit. An earnings-quality assessment should separate legal items, tax effects and operating leverage rather than presenting all spending as temporary.
Cash flow, liquidity and capital allocation
Quarterly operating cash flow was $31.862 billion; after $30.116 billion of capital purchases and $962 million of finance-lease principal, free cash flow was $784 million. That is a 1.3% cash-flow margin and only 2.5% of operating cash flow. Cash and marketable securities of $90.26 billion exceeded long-term debt of $83.66 billion by $6.60 billion, before other liabilities. The earnings franchise is therefore stronger than its current residual cash generation.
Valuation judgment and thesis tests
The valuation case depends on cash recovery after the current investment phase. The $18 first-year equity cash-flow assumption below is well above annualized first-half residual cash per share and must be understood as a normalization assumption. It cannot be justified by advertising growth alone. Compare incremental revenue and engagement with depreciation, operating expenses, lease commitments and capital additions. A residual-income framework can test whether returns on equity exceed the required return when current cash flow is low. Stress a weaker advertising cycle and persistent high spending together. Governance concentration, privacy regulation and large commitments to uncertain products raise the importance of a margin of safety. The thesis strengthens when advertiser returns remain attractive and the cash conversion ratio improves without relying on favorable tax items.
Catalysts and portfolio role
Watch advertiser returns, engagement, AI monetization and cash generation after infrastructure investment. Better operating leverage would improve the investment case. This holding shares exposure to growth expectations and equity discount rates with other portfolio companies. Review its position size using current value, rather than its original $1,000 allocation.
Valuation scenarios · editorial assumptions
These are sensitivity illustrations, not company guidance, consensus estimates or official STA Research targets. EPS is assumed for the next 12 months; multiples are selected to test growth, duration and risk. An earnings multiple is a cross-check, not a complete estimate of intrinsic value.
| Case | Assumed EPS | Assumed P/E | Implied price | Vs. snapshot |
|---|---|---|---|---|
| Bear | $25.00 | 22.0× | $550.00 | -25.6% |
| Base | $30.00 | 27.0× | $810.00 | +9.6% |
| Bull | $36.00 | 32.0× | $1152.00 | +55.9% |
Five-year equity cash-flow valuation
Assume first-year FCFE of $18.00 per share, 12.0% annual growth in years 2–5, 10.5% cost of equity and 3.0% perpetual growth after year 5. This is normalized distributable cash after reinvestment, debt service and net borrowing, under a stable diluted share basis. It is an assumed future cash path; company-reported free cash flow is a separate historical measure.
Illustrative present value per share $319.80-56.7% versus the dated closing price.
Default assumptions · terminal growth fixed at 3.0% for the interactive calculation.
Discount-rate and terminal-growth sensitivity
The table uses the default cash-flow assumptions. Columns show terminal growth; rows show cost of equity. It remains fixed when interactive inputs change.
| Cost of equity | 2% terminal growth | 3% terminal growth | 4% terminal growth |
|---|---|---|---|
| 9.5% | $330.72 | $371.13 | $426.24 |
| 10.5% | $290.00 | $319.80 | $358.77 |
| 11.5% | $257.90 | $280.60 | $309.34 |
For an illustrative CAPM decomposition only, assume a 4% risk-free rate and 5% equity risk premium: the default discount rate corresponds to beta 1.30. These are modeling assumptions, not current Treasury yields or measured betas. Terminal value dominates many growth valuations; use a margin of safety and compare multiple methods.
Reverse cash-flow test: the dated price would require first-year FCFE of $41.59 per share under these growth and discount assumptions. The cash-flow and earnings-multiple scenarios differ because they assume different cash conversion and earnings persistence; their outputs should not be averaged into a price target.
TSLATeslaElectric vehicles & energy
43 analysts · Target range $125.00–$600.00 · Targets dated 2026-10-06 · Modeled share equivalents: 627.8778
Industry and competitive position
Tesla combines vehicle manufacturing, energy storage and options on autonomy and robotics. These businesses have different capital intensity and evidence thresholds. The core operating model should be valued separately from probability-weighted future businesses. A robotaxi scenario needs explicit revenue per vehicle, utilization, insurance, supervision and regulatory costs; a product demonstration is not equivalent to scalable commercial economics.
Profitability and earnings quality
Q2 2026 revenue was $28.236 billion. First-half revenue was $50.623 billion and net income was $1.619 billion. Regulatory credit revenue, stock compensation and investment marks should be reviewed before choosing normalized EPS. Q3 delivery data are available, but the full Q3 earnings release is still pending at this snapshot; delivery growth alone does not establish margin improvement.
Cash flow, liquidity and capital allocation
First-half operating cash flow of $8.634 billion less $8.282 billion of net cash capital purchases yields $352 million of simple free cash flow, a 0.7% first-half revenue margin. This excludes finance-lease principal and should not be confused with unrestricted distributable cash. Cash and short-term investments totaled $43.524 billion. The balance-sheet liquidity offers funding flexibility, but cash generation after investment remains the valuation constraint.
Valuation judgment and thesis tests
A conventional P/E scenario is deliberately incomplete here: much of the quoted valuation can reflect expectations for businesses not captured by current earnings. The $2 first-year equity cash-flow assumption below requires a substantial improvement on current residual cash generation. It is a scenario, not evidence that autonomy will deliver those proceeds. Compare a core auto/energy cash-flow value with a separately probability-weighted autonomy value and subtract incremental capital requirements. Do not attach the same success probability to technical feasibility, regulatory approval and profitable deployment. Stress vehicle price reductions, warranty costs, lower utilization and a delayed autonomy rollout together. The broad analyst target range is disagreement, not a statistical confidence interval. Thesis validation requires repeatable unit economics and cash returns rather than delivery volume alone.
Catalysts and portfolio role
Watch automotive margins, energy economics and evidence of commercially scalable autonomy. Progress must be assessed against execution costs and regulatory constraints. This holding shares exposure to growth expectations and equity discount rates with other portfolio companies. Review its position size using current value, rather than its original $1,000 allocation.
Valuation scenarios · editorial assumptions
These are sensitivity illustrations, not company guidance, consensus estimates or official STA Research targets. EPS is assumed for the next 12 months; multiples are selected to test growth, duration and risk. An earnings multiple is a cross-check, not a complete estimate of intrinsic value.
| Case | Assumed EPS | Assumed P/E | Implied price | Vs. snapshot |
|---|---|---|---|---|
| Bear | $1.50 | 60.0× | $90.00 | -76.4% |
| Base | $3.00 | 90.0× | $270.00 | -29.1% |
| Bull | $5.00 | 120.0× | $600.00 | +57.6% |
Five-year equity cash-flow valuation
Assume first-year FCFE of $2.00 per share, 30.0% annual growth in years 2–5, 14.0% cost of equity and 3.0% perpetual growth after year 5. This is normalized distributable cash after reinvestment, debt service and net borrowing, under a stable diluted share basis. It is an assumed future cash path; company-reported free cash flow is a separate historical measure.
Illustrative present value per share $39.38-89.7% versus the dated closing price.
Default assumptions · terminal growth fixed at 3.0% for the interactive calculation.
Discount-rate and terminal-growth sensitivity
The table uses the default cash-flow assumptions. Columns show terminal growth; rows show cost of equity. It remains fixed when interactive inputs change.
| Cost of equity | 2% terminal growth | 3% terminal growth | 4% terminal growth |
|---|---|---|---|
| 13.0% | $40.69 | $43.88 | $47.77 |
| 14.0% | $36.82 | $39.38 | $42.46 |
| 15.0% | $33.56 | $35.66 | $38.13 |
For an illustrative CAPM decomposition only, assume a 4% risk-free rate and 5% equity risk premium: the default discount rate corresponds to beta 2.00. These are modeling assumptions, not current Treasury yields or measured betas. Terminal value dominates many growth valuations; use a margin of safety and compare multiple methods.
Reverse cash-flow test: the dated price would require first-year FCFE of $19.33 per share under these growth and discount assumptions. The cash-flow and earnings-multiple scenarios differ because they assume different cash conversion and earnings persistence; their outputs should not be averaged into a price target.
TSMTSMCSemiconductor foundry
21 analysts · Target range $440.00–$700.00 · Targets dated 2026-10-05 · Modeled share equivalents: 88.1834
Industry and competitive position
TSMC is a manufacturing platform for multiple semiconductor designers, giving it exposure across competing chips. Its competitive position should be assessed through process capability, yield, advanced packaging and the reliability of large-volume delivery. The economics remain capital intensive. Serving competing customers diversifies design risk, but does not diversify away an industry-wide reduction in compute spending.
Profitability and earnings quality
Q2 2026 revenue was $40.20 billion, gross margin 67.7% and operating margin 60.3%. Diluted EPS was $4.31 per U.S. ADR. Management guided Q3 operating margin to 56%–58%, so projecting the latest margin unchanged would conflict with the company’s stated near-term outlook. Compare earnings in the same currency and share unit: one ADR represents five ordinary shares.
Cash flow, liquidity and capital allocation
First-half operating cash flow of $46.914 billion less $26.799 billion of property/equipment purchases yields $20.115 billion simple free cash flow, about 26.4% of first-half revenue. Current assets/current liabilities were 2.46 times. Cash of $98.196 billion exceeded approximately $30.780 billion of bonds and bank-loan balances. Currency translation rates differ between balance sheets and income/cash-flow statements, so small rounding differences across USD tables are expected.
Valuation judgment and thesis tests
Use a cyclical, multistage cash model that connects revenue to utilization, margins and capacity investment. The $9 first-year equity cash-flow assumption per ADR is above a simple annualization of first-half cash flow per ADR, requiring improving cash conversion or growth. Include overseas-fab economics, subsidies and maintenance investment consistently; subsidy cash should not be counted twice in operating returns and asset values. The illustrative equity discount rate includes a risk allowance through the assumed rate, not a separately estimated geopolitical probability. A Taiwan disruption can affect TSMC and its portfolio customers together, so it is a portfolio-level risk. Monitor yields, capital productivity, customer concentration and the gap between reported earnings and cash after expansion spending.
Catalysts and portfolio role
Monitor leading-edge capacity, customer demand and execution of new process ramps. Continued utilization with resilient margins would support earnings growth. This holding shares exposure to growth expectations and equity discount rates with other portfolio companies. Review its position size using current value, rather than its original $1,000 allocation.
Valuation scenarios · editorial assumptions
These are sensitivity illustrations, not company guidance, consensus estimates or official STA Research targets. EPS is assumed for the next 12 months; multiples are selected to test growth, duration and risk. An earnings multiple is a cross-check, not a complete estimate of intrinsic value.
| Case | Assumed EPS | Assumed P/E | Implied price | Vs. snapshot |
|---|---|---|---|---|
| Bear | $16.00 | 22.0× | $352.00 | -27.0% |
| Base | $19.00 | 28.0× | $532.00 | +10.3% |
| Bull | $23.00 | 32.0× | $736.00 | +52.6% |
Five-year equity cash-flow valuation
Assume first-year FCFE of $9.00 per share, 18.0% annual growth in years 2–5, 11.5% cost of equity and 3.0% perpetual growth after year 5. This is normalized distributable cash after reinvestment, debt service and net borrowing, under a stable diluted share basis. It is an assumed future cash path; company-reported free cash flow is a separate historical measure.
Illustrative present value per share $168.04-65.2% versus the dated closing price.
Default assumptions · terminal growth fixed at 3.0% for the interactive calculation.
Discount-rate and terminal-growth sensitivity
The table uses the default cash-flow assumptions. Columns show terminal growth; rows show cost of equity. It remains fixed when interactive inputs change.
| Cost of equity | 2% terminal growth | 3% terminal growth | 4% terminal growth |
|---|---|---|---|
| 10.5% | $173.74 | $192.10 | $216.10 |
| 11.5% | $154.06 | $168.04 | $185.75 |
| 12.5% | $138.17 | $149.09 | $162.58 |
For an illustrative CAPM decomposition only, assume a 4% risk-free rate and 5% equity risk premium: the default discount rate corresponds to beta 1.50. These are modeling assumptions, not current Treasury yields or measured betas. Terminal value dominates many growth valuations; use a margin of safety and compare multiple methods.
Reverse cash-flow test: the dated price would require first-year FCFE of $25.83 per share under these growth and discount assumptions. The cash-flow and earnings-multiple scenarios differ because they assume different cash conversion and earnings persistence; their outputs should not be averaged into a price target.
LLYEli LillyPharmaceuticals
30 analysts · Target range $930.00–$1,600.00 · Targets dated 2026-10-05 · Modeled share equivalents: 20.7727
Industry and competitive position
Lilly provides healthcare exposure through diabetes, obesity and other therapies. Its advantage must be evaluated through clinical benefit, supply capacity, prescriber adoption and payer access. A large potential patient population does not equal a fully reimbursed revenue opportunity. Product-level valuation is useful because patent lives, competition and clinical outcomes differ; successful treatments should not automatically confer value on every pipeline asset.
Profitability and earnings quality
Q2 2026 revenue was $22.974 billion and operating income $8.978 billion, giving a 39.1% operating margin. Reported EPS was $7.94 and non-GAAP EPS $8.38; both included $3.03 of acquired research charges. The adjusted measure therefore does not remove this expense. The midpoint of full-year non-GAAP guidance was $36, making the snapshot quote roughly 32.2 times that guidance, not a trailing P/E.
Cash flow, capital allocation and accounting
The drug-development model requires research, manufacturing expansion and investment before commercialization. Expensing research can make an accounting ROIC appear higher than economic returns when internally developed assets are omitted. Acquired research should not always be dismissed as one-time if purchasing new compounds is a recurring strategy. Evaluate net debt, maturity schedules, manufacturing commitments and cash conversion alongside reported earnings; this page does not assign an unsourced liquidity ratio.
Valuation judgment and thesis tests
Use a product-based cash-flow model for marketed therapies and risk-adjusted net present value for pipeline programs. For each development asset, probability-weight future cash flows and development costs at their appropriate stages, including failure scenarios. Avoid applying clinical success probabilities a second time through an arbitrary discount-rate penalty. The $26 first-year equity cash-flow assumption below is an editorial normalization, approximately 68% of the assumed $38 base EPS; it is not reported free cash flow. The $38 base EPS differs from the $36 company-guidance midpoint and assumes further operating development. Reimbursement pressure, safety signals, competing therapies, lower net pricing and supply execution can affect volume and margins together. Healthcare adds different revenue drivers, but Lilly remains a growth stock with valuation and interest-rate sensitivity.
Catalysts and portfolio role
Watch supply expansion, treatment uptake, reimbursement and pipeline results. Higher capacity and successful development can support growth, but approvals and commercial demand need separate assessment. This holding shares exposure to growth expectations and equity discount rates with other portfolio companies. Review its position size using current value, rather than its original $1,000 allocation.
Valuation scenarios · editorial assumptions
These are sensitivity illustrations, not company guidance, consensus estimates or official STA Research targets. EPS is assumed for the next 12 months; multiples are selected to test growth, duration and risk. An earnings multiple is a cross-check, not a complete estimate of intrinsic value.
| Case | Assumed EPS | Assumed P/E | Implied price | Vs. snapshot |
|---|---|---|---|---|
| Bear | $34.00 | 25.0× | $850.00 | -26.6% |
| Base | $38.00 | 32.0× | $1216.00 | +5.1% |
| Bull | $44.00 | 38.0× | $1672.00 | +44.5% |
Five-year equity cash-flow valuation
Assume first-year FCFE of $26.00 per share, 15.0% annual growth in years 2–5, 10.5% cost of equity and 3.0% perpetual growth after year 5. This is normalized distributable cash after reinvestment, debt service and net borrowing, under a stable diluted share basis. It is an assumed future cash path; company-reported free cash flow is a separate historical measure.
Illustrative present value per share $506.71-56.2% versus the dated closing price.
Default assumptions · terminal growth fixed at 3.0% for the interactive calculation.
Discount-rate and terminal-growth sensitivity
The table uses the default cash-flow assumptions. Columns show terminal growth; rows show cost of equity. It remains fixed when interactive inputs change.
| Cost of equity | 2% terminal growth | 3% terminal growth | 4% terminal growth |
|---|---|---|---|
| 9.5% | $524.12 | $589.00 | $677.48 |
| 10.5% | $458.86 | $506.71 | $569.27 |
| 11.5% | $407.46 | $443.89 | $490.05 |
For an illustrative CAPM decomposition only, assume a 4% risk-free rate and 5% equity risk premium: the default discount rate corresponds to beta 1.30. These are modeling assumptions, not current Treasury yields or measured betas. Terminal value dominates many growth valuations; use a margin of safety and compare multiple methods.
Reverse cash-flow test: the dated price would require first-year FCFE of $59.39 per share under these growth and discount assumptions. The cash-flow and earnings-multiple scenarios differ because they assume different cash conversion and earnings persistence; their outputs should not be averaged into a price target.
Explore different prices and investment amounts
Change a share price or the amount allocated to each holding to recalculate the model. These changes affect your view only; they do not update the published snapshot or execute trades. Analyst targets remain the dated reference estimates.
The analytical toolkit
The enclosed research applies established analytical methods based on CFA Analytical principals: financial-statement analysis, earnings normalization, discounted cash flow, valuation multiples, return on invested capital and scenario analysis. It does not imply CFA Institute endorsement or claim that the author holds the CFA charter.
Cash flow and required return
FCFF = EBIT × (1 ? tax rate) + noncash charges ? fixed-capital investment ? working-capital investment. Discount FCFF at WACC, then subtract debt and other senior claims and add eligible non-operating assets to reach common-equity value.
FCFE = net income + noncash charges ? fixed-capital investment ? working-capital investment + net borrowing. Discount equity cash flows at the cost of equity. Do not add cash or subtract debt again when those balances and financing flows are already embedded in a complete equity cash-flow model.
The illustrations on this page use assumed FCFE per diluted share directly: PV = sum of years 1–5 FCFE discounted at the cost of equity + year-5 terminal value discounted to today. Terminal value = year-5 FCFE × (1 + terminal growth) ÷ (cost of equity ? terminal growth). The required return must exceed terminal growth.
Quality, reinvestment and risk
Compare operating margins, cash conversion, leverage and liquidity within consistent fiscal periods. Remove disclosed investment gains and one-off items carefully; adjusted earnings can still include recurring economic costs. Stock compensation affects dilution even when it is noncash.
ROIC = after-tax operating profit ÷ average invested capital. Value creation depends on the spread between ROIC and the cost of capital, together with the amount reinvested. Residual income = earnings minus the required return on beginning equity capital; it can help when current cash flow is depressed.
Illustrative CAPM: cost of equity = risk-free rate + beta × equity risk premium. This page uses assumed rates and betas to explore sensitivity. Portfolio volatility, Sharpe ratios and VaR require a historical return series and explicit estimation window; they are not inferred from one price snapshot.
Method references: CFA Institute: free cash flow valuation · Residual income valuation · Capital allocation and ROIC.
How the model is calculated
- Holding value: initial investment ÷ normalized entry price × current share price. Dollar gain equals holding value less initial investment. Percentage gain equals dollar gain ÷ initial investment × 100.
- Portfolio return: total holding value ÷ total initial capital ? 1. It is a cumulative return, not an annualized return and not the sum of the individual percentages.
- Entry timing: May 30, 2008 is the pre-June reference for stocks already listed. US$1,000 is notionally reserved without interest for each later IPO, then invested at the first trading-day close. Fractional share equivalents are assumed; the IPO offer price is not assumed to be available.
- Share basis: historical inputs are normalized for subsequent splits. GOOGL is modeled on a normalized Class A series rather than a reconstruction of separate GOOG/GOOGL lots. Historical source rounding makes the dollar values and return percentages approximate.
- What is excluded: cash dividends and reinvestment, fees, taxes, foreign exchange, interest on reserved IPO cash, trading slippage and rebalancing. This is a price-return illustration, not total return or evidence that these stocks were all recommended in 2008.
- Forecasts: average, low and high 12-month analyst targets are sourced from S&P Global consensus as displayed by Stock Analysis. They are third-party analyst estimates, not proprietary STA Research price targets. Target snapshot dates: 2026-10-05, 2026-10-06.
- Research: company-reported results support the financial facts. Investment theses, catalysts and risk assessments are editorial interpretations for this portfolio. Linked StockTargetAdvisor coverage supplies additional context where available.
- Updates: this version uses 2026-10-06 regular-session closes. Published inputs can be refreshed in WordPress, and the calculations recalculate when the page loads. The scenario tool never changes the saved site data.
Historical entry prices and source notes
| Stock | Reference date | Normalized price | Source and treatment |
|---|---|---|---|
| NVDA | 2008-05-30 | 0.617500 | May 2008 close of $24.70 divided by the subsequent 4:1 and 10:1 splits. Rounded historical source. Historical source |
| AAPL | 2008-05-30 | 6.740000 | May 30, 2008 split-adjusted closing price, rounded to cents. Uses Close, not dividend-adjusted Adj Close. Historical source |
| MSFT | 2008-05-30 | 28.320000 | Historical closing share price; no subsequent split adjustment required. Historical source |
| AMZN | 2008-05-30 | 4.080000 | May 30, 2008 historical price series normalized for the 2022 20:1 split; rounded to cents. Historical source |
| AVGO | 2009-08-06 | 1.618000 | Avago first trading-day close of $16.18, divided by the July 2024 10:1 split. Uses public-market close, not the $15 offer price. Historical source |
| GOOGL | 2008-05-30 | 14.660000 | Split-normalized Class A historical series, rounded to cents. Models the series as Class A equivalents rather than separate GOOG and GOOGL lots. Historical source |
| META | 2012-05-18 | 38.230000 | Facebook first trading-day close of $38.23, not the $38 IPO offer price. Historical source |
| TSLA | 2010-06-29 | 1.592667 | First trading-day close of $23.89 divided by the 2020 5:1 and 2022 3:1 splits. Uses close, not the $17 IPO offer price. Historical source |
| TSM | 2008-05-30 | 11.340000 | May 30, 2008 historical U.S. ADR price series, rounded to cents. All current and target prices refer to the U.S. ADR. Historical source |
| LLY | 2008-05-30 | 48.140000 | May 30, 2008 historical closing share-price series; rounded to cents. Dividends are excluded. Historical source |
Past performance does not establish future returns. Target-price upside is an estimate, and individual holdings can lose value.
STA Research (StockTargetAdvisor.com) is a independent Investment Research company that specializes in stock forecasting and analysis with integrated AI, based on our platform stocktargetadvisor.com, EST 2007.