#55 World's best stocks - Ep.4
Special Netherlands Edition!
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Welcome to episode 4 of the “World’s best stocks”. As for the first three episodes, I used the Finchat (Affiliate Link) screener with the following filters:
ROIC 10Y Average >= 15%
Revenue 10Y CAGR >=10%
Diluted EPS before extra items 10Y CAGR >= 10%
Net Debt/EBITDA =<3
EPS Forward 2Y CAGR >=10%
I recently spent a few days in the Netherlands, specifically in Amsterdam and The Hague, and thoroughly enjoyed my time there. This experience inspired me to focus on Dutch companies for my next analysis. Surprisingly, only one company initially came up in my search. However, I believe the Netherlands is home to many other outstanding businesses, and I’d like to share two additional companies that I found particularly interesting.
#1 ASML Holding N.V.
ROIC 10Y Average = 15.15%
Revenue 10Y CAGR = 13.51%
Diluted EPS before extra items 10Y CAGR = 17.72%
Net Debt/EBITDA = -0.05
EPS Forward 2Y CAGR = 21.79%
Market Cap = $327.5 billion
Total Return last 10Y = 984%
Forward P/E = 30.84
ASML is a Dutch multinational company that is a key player in the semiconductor industry, specializing in the development and manufacturing of photolithography machines used in the production of microchips. Founded in 1984, the company holds a near-monopoly in the production of extreme ultraviolet (EUV) lithography systems, essential for making the most advanced semiconductors. Its machines are crucial for producing the tiny, complex circuits in modern chips used in smartphones, computers, and other electronic devices. ASML works with leading chip manufacturers like Intel, TSMC, and Samsung, making it a critical supplier to the global technology ecosystem. Headquartered in Veldhoven, the company’s innovative technology has made it one of the most valuable firms in Europe.
First thoughts
ASML is the undisputed leader in its field, playing a crucial role in the semiconductor industry. Its machines are so vital that they have political significance, as export restrictions are placed on its high-end equipment. Thanks to its technical leadership, ASML is currently enjoying significant financial success. While the company is not immune to broader economic shifts, its near-monopoly in advanced lithography gives it a uniquely strong market position. A Forward P/E of around 30 might seem reasonable for such a dominant company, but it still feels a bit pricey to me. Additionally, I'm not an expert in semiconductors and can't fully assess the potential threats from emerging technologies or competitors, as technological leadership is often a moat that can be disrupted over time.
#2 Universal Music Group N.V.
ROIC 5Y LTM = 11.1%
Revenue 5Y CAGR = 13.02%
Diluted EPS before extra items 10Y CAGR = 6.77%
Net Debt/EBITDA = 1.76
EPS Forward 2Y CAGR = 9.57%
Market Cap = $47.3 billion
Total Return since IPO = 0.47%
Forward P/E = 24.65
Universal Music Group (UMG) is one of the world’s largest and most influential music companies, representing a diverse roster of artists across all genres. Founded in 1934, UMG operates as a global music corporation with activities spanning recorded music, music publishing, merchandising, and audiovisual content. The company controls a vast catalog of songs and is home to many prominent artists like Taylor Swift, Drake, and The Beatles. UMG has adapted to the digital age by investing in streaming services and expanding its presence on platforms like Spotify, Apple Music, and YouTube. Headquartered in Hilversum, Netherlands, UMG continues to shape the global music industry through its strong market position and innovative strategies.
First thoughts
Universal Music Group is an incredibly interesting company, especially for anyone fascinated by the music industry. Along with Warner Music and Sony Music, it is one of the three dominant players that control the rights to much of the world's most popular music, giving these companies a unique position when it comes to negotiating with platforms like Spotify. Their ownership of music rights creates a strong competitive moat. While I find it difficult to assess UMG's growth prospects without further analysis, it's clear that their stronghold on the music market is a key advantage. At the moment, I can't definitively say whether a forward P/E of 24 is too expensive; mathematically, it might seem high, but considering the company's high quality and market position, it's not so easy to judge.
#3 Adyen N.V.
ROIC 5Y Average = 11.18%
Revenue 5Y CAGR = 34.36%
Diluted EPS before extra items 5Y CAGR = 35.85%
Net Debt/EBITDA = -10.26
EPS Forward 2Y CAGR = 26.54%
Market Cap = $46.4 billion
Total Return last 5Y = 125%
Forward P/E = 42.06
Adyen is a Dutch multinational payment company that provides end-to-end payment solutions for businesses, enabling them to accept payments across various platforms, including online, mobile, and in-store. Founded in 2006, Adyen has become a key player in the global payments industry, offering a unified platform that simplifies transactions and integrates fraud prevention, analytics, and customer experience tools. Its clients include major companies like Spotify, Uber, and eBay, making it a trusted partner for many large-scale enterprises. Adyen’s technology-driven approach and transparent pricing model have helped it grow rapidly, with a focus on seamless global payment processing. Headquartered in Amsterdam, Adyen operates in over 30 countries, continuing to expand its global footprint.
First thoughts
The payment industry is highly competitive and heavily regulated, but it can also be a goldmine for companies that execute well, offering significant earning potential. Adyen is certainly excelling in this space, showing remarkable growth while maintaining strong profitability, making it a standout in the industry. It’s a well-run company with a clear strategy, but when it comes to valuation, current metrics seem somewhat expensive, especially in comparison to other payment stocks. However, given that Adyen is one of the fastest-growing companies in the sector, a higher multiple might be justified. It's definitely a stock worth keeping on everyone's watchlist!
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Disclaimer: The information provided in this publication is for educational and informational purposes only and does not constitute financial advice. The content is solely reflective of my personal views and opinions based on my research and is not intended to be used as a basis for investment decisions. While every effort is made to ensure that the information is accurate and up-to-date, the writer makes no representations as to the accuracy, completeness, suitability, or validity of any information in this post and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All readers are advised to conduct their own independent research or consult a professional financial advisor before making any investment decisions. The author is not invested in the mentioned stocks.