Consider buying shares of Grab (GRAB), the "Uber of Southeast Asia," which is viewed as good value around the $5 price level. A key catalyst to watch is its potential acquisition of rival Goto, which could be transformative if done at a fair price. For a faster-growing opportunity, UK supplement company Applied Nutrition is beating expectations and its stock has clear room to run higher from its current valuation. Its efficient, vertically-integrated business model is driving 24% annual revenue growth. Finally, Spanish eye clinic Clinica Baviera (CBAV) offers a defensive, high-margin investment benefiting from an aging population and is considered reasonably priced.

Grab (GRAB)

• Business Overview: Described as the "Uber of Southeast Asia," Grab is a "super app" offering ride-sharing, food delivery, and financial services.
• Bullish Case:
  • Strong Growth: The company has a "long runway for growth," with revenues growing 23% in the most recent quarter.
  • Improving Profitability: Gross margins have hit a new high, and the company is on a path to generate $1 billion of free cash flow over the next couple of years.
  • Solid Financials: Grab has a strong balance sheet with nearly $4 billion in cash.
  • Management: The company is noted as having "good management."
• Valuation & Price:
  • The speaker notes the stock "isn't particularly cheap," with a $21 billion market value on $3 billion of revenue.
  • However, they believe the stock looks like "good value around $5."
• Potential Catalyst / Risk:
  • There are rumors of an acquisition of its Indonesian rival, Goto.
  • Risk: Paying too much for Goto would be a negative for investors.
  • Opportunity: Acquiring Goto at a "fair price could be transformative."

Takeaways

• Grab is presented as a long-term growth investment in the expanding Southeast Asian market.
• Investors should be comfortable with a higher valuation in exchange for significant growth potential in revenue and future cash flow.
• The potential acquisition of Goto is a key event to monitor. A disciplined, well-priced deal could be a major positive catalyst, while overpaying presents a significant risk.

Applied Nutrition

• Business Overview: A UK-based company that produces health and fitness supplements, such as protein and creatine powders.
• Competitive Advantage:
  • The speaker highlights the company's "secret sauce": vertical integration.
  • This model allows them to test, manufacture, and ship new products in just a few weeks, creating an "iteration machine" that can quickly adapt to market trends.
• Financial Performance:
  • The company is outperforming expectations, with top-line revenue growth of 24% for the year.
  • This significantly beat their own guidance of 15% growth.
• Valuation:
  • The stock trades at roughly 14 times EBITDA.
  • The speaker believes that at this valuation, the "stock has clear room to run higher."
• Risk Factor:
  • The company operates in a "highly competitive industry."

Takeaways

• Applied Nutrition is positioned as a high-growth company that has found a way to succeed in a competitive market through operational speed and efficiency.
• The strong revenue growth, which is accelerating beyond guidance, is a key bullish indicator.
• The valuation of 14x EBITDA is seen as reasonable, suggesting potential for the stock price to increase if the company continues to execute well.

Clinica Baviera (CBAV)

• Business Overview: A Spanish company that operates a network of eye clinics across Europe.
• Bullish Case:
  • Defensive Business: It is described as a "high margin and defensive business" with strong future prospects.
  • Favorable Trends: The business benefits from long-term demographic trends like an aging population and health issues arising from increasing screen time (e.g., cataracts, myopia).
  • Strong Leadership: It is a founder-led business with a proven track record.
• Financial Performance:
  • Consistent Growth: Over the last five years, the company has grown sales by 17% per year.
  • Highly Profitable: It has achieved impressive average free cash flow margins of 18% over the same period.
• Future Growth Drivers:
  • Continued expansion by opening new clinics ("rolling out new stores").
  • Optimizing its recent UK acquisition, Optimax.
• Valuation:
  • The speaker views the current market capitalization of 700 million euros as "more than reasonable" for a business of this quality.

Takeaways

• Clinica Baviera is presented as a stable, cash-generative investment benefiting from undeniable long-term societal trends.
• The combination of consistent double-digit sales growth and high free cash flow margins makes it an attractive "compounder" stock.
• The current valuation is considered fair, offering a good entry point for an investment in a reliable, growing healthcare business.