23 Stocks for 2023 | Car Sales, Aussie Broadband and PayPal! Pt III

Candice: [00:00:10] Hello and welcome to Talk Money To Me. I'm Candice Bourke. 

Felicity: [00:00:14] And I'm Felicity Thomas. 

Candice: [00:00:16] We are back once again with our final part to this special series for 23 stocks in 2023. 

Felicity: [00:00:23] So as a reminder, last week we covered off Elders, Play Side, Qantas, Merck. We also did uranium with a few ideas there, highlighting Silex, Disney, Total Energies, Mineral Resources Strand Line, Seek, Family Zone, Ulta Beauty, Independents Group, James Hardie and Global Lithium Resources. 

Candice: [00:00:44] So many stocks, so many great ideas. So we're at 15, so we are going to deliver the remaining stocks for our full list of 23 stock ideas for this new year. Now, before we reveal the final stocks to make the list, please remember our chat today is not considered personal advice, even though we are registered financial advisors at Shaw and Partners. As always, the podcast and the content discussed does not constitute as financial advice, nor is it a financial product. The content on the podcast is general in nature and as always, go out and seek appropriate professional advice before you make your investment decisions. 

Felicity: [00:01:18] Now, in fact, all companies discussed on our show are offered in good faith based on facts known at the time of recording and do not contain all relevant information in respect of the financial products to which they relate. Now, it's all based on the 7th of February 2023. 

Candice: [00:01:33] Now let's kick off your first biodiversity. What are you adding next? 

Felicity: [00:01:37] Okay, so I'm going to give you a new idea today. The code is J-R-V and the company is called Jervois Global. Now, Jervois Global operates a coal bank refinery in Finland, and the company is also developing the Idaho Coalbed operation in Idaho, USA and restarting the San Miguel Paulista Nickel Cob refinery in Brazil. Now, combat is a key component of lithium ion batteries, and demand is expected to significantly increase due to growth in the electric vehicle fleet. 

Candice: [00:02:09] Interesting. Well, I'm not surprised. It's another future face commodity and resource play in the whole EV space. Let's talk about financials. Let's go under the hood with the numbers there.

Felicity: [00:02:18] Okay. So a few highlights is basically they've started their initial mine development completion surface construction in final stages and commissioning is well underway for the first quarter of 2023. Now they are San Miguel Nickel Kolbert refinery has also restarted execution. They had a really solid Q4 2020 sales volumes in Finland in challenging market conditions with group revenue, US 353.9 million. So this is not a small business. Now they've actually recently, in November 2022, did a US $150 million equity raise to fund their near term growth pipeline. Good for the balance sheet, but it did dilute shareholding which has caused a bit of a sell off recently. 

Candice: [00:03:04] Yeah, definitely has. So the sell off of Jervois lwas, you know, it was highs of $0.75. Right. So what about that? That's not great. But you know, it is good for the long term trajectory. So let's talk about drivers going forward. 

Felicity: [00:03:17] The market comes in ebbs and flows, right? So we can't just look at the short term. So near-term drivers, in my opinion, we've got a demand growth is continues to be positive and the market expects this trend to continue. Significant increased interest from battery segments for forward requirements including OEMs, post-COVID restart in China and pent up demand expected to be a key near-term driver here, as well as stable demand across chemicals, catalysts, ceramics and powder meteorology segments. There's also the aerospace sector, which continues to be strong, especially in the US. 

Candice: [00:03:53] Yeah, very interesting to watch that one play out. Now let's chat about the upside is what we all want to know, right? How much money can we potentially make in this stock for this year? 

Felicity: [00:04:02] Exactly. Everyone's like yada yada, yada. Tell us what's happening. Where is it going to go?

Candice: [00:04:06] After price target? 

Felicity: [00:04:07] Let's say, look, we retain our buy recommendation, but we have actually reduced our price target down from $0.84 to $0.77. So the current price of Jervois is $0.25. So a bit of a sell off, right, Considering highs of 75, that's upside if it gets to shore price target of 208%, consensus is about $0.47. So it still double from here, 88%. Now, I just want to reiterate why it's a buy now, Avi. Batteries require nickel and cobalt. Nickel and cobalt, a critical minerals jervois assets are strategically important. They've also got a really diversified portfolio, highly experienced management and the balance sheet to underpin delivery in 2023. [00:04:52][45.0]

Candice: [00:04:53] That's a great wrap up on Jervois. So for me, switching over to the next slide, it's also a new buy idea. The business is listed in Australia and it only joined the ASX back in 2020. So a bit of a Covid baby, this one. But since the IPO it has performed up about 52% on the IPO price of a dollar. The company I'm going to talk about right now is one of the fastest growing retail service provider in Australia. So bit of a snooze kind of telecommunications roll out of infrastructure business. But just stay with me because I think there's a lot of upside to come in this name. 

Felicity: [00:05:28] Okay. So what is the name of this company? Candice. 

Candice: [00:05:32] So the company is Aussie Broadband and the code is A-B-B on the stock exchange. And as I mentioned, it's really gaining a lot of market share in the NBN rollout and it's really emerged as being the major player in the last few years. So let's look at the business model, right? Their services, they deliver a range of different segments within the residential and business space, about 81% Rosie and 12% of the business commercial side in terms of their revenue respectively. And they had at that point around 300,000 national service providers and services going on as well as their in the business mobile sector entertainment and they bundle their services. 

Felicity: [00:06:14] Okay. So I guess a larger competitor would be Telstra. So why are you keen on Aussie broadband? 

Candice: [00:06:19] Yeah, Telstra is definitely one of their biggest competitors and the reason why and one of the reasons why I should say is why I like ABB for our stock list for 2023 is that there are major structural tailwinds that I can see. So data is expected to double globally every four years with the use of interconnected devices, cloud, 5G, we're all wanting ultra high speed connectivity. We all need that as consumers 100%. And it's frustrating when your provider drops you down from 5G to 4G or 3G. It's like the biggest downgrade in your life, right? 

Felicity: [00:06:57] I know. How did we ever live on 3G or 4G? Now that we have 5G. 

Candice: [00:07:02] Yeah. So coming back to the business, right. So the NBN is delivering incentives, as we know, to really drive customers on to the higher speed connection. And Covid really accelerated this demand and the data use that we saw has been exacerbated up 60%. So that's really good In terms of the competitive landscape. If you look at ABS plans, over 75% of them are 50 megabytes higher and 40% of the service is actually 100 megabytes per second. So on average they're actually delivering higher speed Internet than their peers, which I like tick. For me. 

Felicity: [00:07:39] That's absolutely a tick. So do we know the latest market guidance? I mean, what's the latest update? 

Candice: [00:07:44] So looking ahead, they did retain and reaffirmed their targets for their FY 23 guidance alongside their FY 25 targets. These targets include 1 million broadband services, currently 610,000 250,000 mobile services currently 42. So big lift in mobile services and 3 million numbers on the voice network and acceleration into the cloud and business services. So all in all, I think that's a really great guidance for the next three years for their growth trajectory. And I think the market's actually not calculating this anywhere in the straight analysis. So there's a lot more organic growth. I think the market's missing. I think if we look at their track record since IPO, they have delivered on what they promised. And I really hope this is going to be the case. So we estimate that if they do hit their targets, it would represent about 160 million plus in Avatar. And let's put into perspective, you know, the group back on an IPO, it had only around 60,000 services today. Like I said, they've got 610,000 services. 

Felicity: [00:08:46] Wow. That is a huge growth. So I guess in terms of upside and valuation, what kind of price target do you have on eBay? 

Candice: [00:08:54] So it's trading around sort of $2.92 mark and consensus places that at $4.15 valuation. But we here at shore are really bullish on eBay. It's in fact one of our top picks for 2023. The telco rollout, you know, is infrastructure services. So we have a price target of $5.41. So that's 85% upside. So let's hope our analyst is right on that one.

Felicity: [00:09:18] Yeah, look, we like to be bullish. I mean, you need to be bullish when you're looking at really solid businesses. 

Candice: [00:09:23] Right. Speaking of bullish, I'm sure you've got a really great idea for us next. So what's your next one?

Felicity: [00:09:28] Yeah, so this isn't a new idea. I'm actually doing a reiterate of my buy. So I pitched this company on the 16th of December as part of our 12 stocks for Christmas episodes. It's trading around 3.10 and now it's 14 is 15. So so far, upside has been 33%. Great double digits. 

Candice: [00:09:47] Not bad for basically one month, right? 

Felicity: [00:09:49] Exactly. So this is Chrysos. The code is c79. I really want you to read listen to that episode to hear more about the company. However a little summary they've. Developed a novel gold assaying technology for the global mining and geochemistry lab industry. Developed in conjunction with CSIRO. Now it is a small cap. The market cap is around 350 million. So I'm sticking with my knitting here.

Candice: [00:10:16] Sticking with your knitting. All right. So what's the knitting telling us in terms of highlights? 

Felicity: [00:10:20] All right. So essentially they released their second quarter 23 cash flow and trading update recently. There's three things that actually stood out to us was, one, unit deployments remain on track, increasing to 15 at report date, and they reiterated expectations to reach 21 deployments by the end of financial year 23. Tick. Now, number two, unit economics continue to improve and utilisation is trending stronger than guidance positioning. See seven nine well two it's changed its fy23 prospectus growth forecasts and three strong cash receipts and lower cash costs. Although due to timing of CapEx payments, it drove lower than expected cash burn with C 79 closing the second quarter 23 with an 81.1 million cash balance providing ample headroom for near-term deployments, While C 79 explores debt funding options for its future roll out. So yes, it is a small cap, but it does have cash in the bank.

Candice: [00:11:24] Interesting. And so like earlier we said, it's already rallied quite a bit. So do you think there's more to come? Likewise, more of a buy now, do you think, or buy more? 

Felicity: [00:11:33] So our price target is 5.40 in the next 12 months. Now, the price target is actually based on a ten year DCF and a 9.2% WAC C Now it only trades at 6.6 times NTM EV sales, while our price target implies ten times underwritten by strong visibility on an 82% revenue growth rate at f y 25. So I guess from an earnings perspective, we really see Chrysos trading at an undemanding 9.9 times FY 25 EBITA, while our price target implies 16.8 times. So consensus is actually higher than Sean Potter's at 6.35. So upside on our price target is another 30%. And if you want to go with consensus or the street, 53%, I'll take that. Exactly. Take that any day. All right. So what's your next idea for the order pad?

Candice: [00:12:24] So for my next idea, it's another new ASX buy idea. One aspect that I look out for, as you know, Felicity, is when the market, you know, the street opinion or investor sentiment has really turned negative on a company so that as a result, good or bad business, the stock is sold off in the markets, right? And for quality businesses, this is such a great buying opportunity. And there was lots of that opportunity that we saw in 2022, particularly for growth stocks that fell out of love, you know, with everything that going on in the macro environment. And I think this one stock I'm about to reveal the stocks now that the tables are turning and the stocks are starting to rally and I think there's more upside to come. 

Felicity: [00:13:03] Yeah, absolutely. We love a sell off of a good company because it just is a buying opportunity for us. Right. To education for our clients portfolios. All right. Suspense is killing me. What is it? 

Candice: [00:13:13] So I'm talking about CarSales, and I hope our listeners are really familiar with this business. The code on the ASX is CAR and it has a current market cap of about 8 billion. So if you're not familiar with Carsales.com, it is Australia's leading provider for online automotive classifications and sales. So it's where you go to find a used cars, sailboat, whatever it is, founded back in 1996 and it listed on the ASX back in September 2009. So its flagship site Car secondary you is not the only service that the business offers. The company also operates a number of different niche sites, including motorbikes, boating and Marines, and they've all done this through really strategic acquisitions over the years. And I think that's going to happen even more so in the next decade to come. 

Felicity: [00:14:01] Interesting. So perhaps you can get another jetski and that one as well. Yeah. 

Candice: [00:14:07] For people that know me, my husband's obsessed with jet skiing and he just wants a whole garage full of them. Anyways, back to the business. So there's two main resources currently for Carsales. Firstly, it's advertising by the websites and then secondly, data and other services provided to the car dealers. 

Felicity: [00:14:24] Okay. So with higher interest rates, inflation on the rise, I mean it's coming down in the US, but it seems to be pretty sticky here. I would think second hand car sales will do well. 

Candice: [00:14:33] Yeah, I mean that was definitely something that we saw just go gangbusters, right? Felicity During the Covid years was everything in the used car sales market, you know, boats, jet skis, it all was just a massive beneficiary because we couldn't get the stock off the ships. So that aside, I think that's still going to be a theme. But in terms of the industry outlook, post-COVID and looking ahead, car sales revenues are dependent on the volume of car transactions in each of its different. Markets globally. Also, you know, we need consumers to want to buy a car and the search for online car. So there will be, you know, some potential macro headwinds going into what potentially could be another tough year. But the main thing we also look at is the dealers profitability. And these aspects are actually here in Australia are really elevated at the moment. So I think car sales can continue to exercise price increases in the next 3 to 5 years. 

Felicity: [00:15:25] Okay. So there's been a bit of noise on the street, right, in regard to the decline in advertising spending lately. I mean, is car getting impacted by that? 

Candice: [00:15:34] Yeah. Car is not immune to this trend. Also, like whilst all of the car sales media revenue from the automotive brand and dealers, they are significant drivers to its revenue. We have seen that it's not back to pre kind of Covid levels. So if you look at the the report of last year, it did grow by 16%, which is great, but we're still about 15% pre-COVID levels. So that's been a result of the impact of the new car supply constraints. Hopefully that goes back and comes back even stronger. But I just want to kind of summarise it all right. Why I think it's a buy or if you have it in your portfolio and add more when you think it's appropriate timing because the current trading conditions for car sales I think is proving to be really positive momentum across all the different business segments that they have. You've got to remember also that automotive is typically the least cyclical of the online classifieds categories as a sector. So in terms of upside, the moment you can pick up car at about 30 times if Y23 estimates, which is expensive, but it is a growth stock. Remember that if you look at it for 25, it's trading on 21 times earnings. 

Felicity: [00:16:46] So it's a long term buy and hold. So in terms of upside, what are we looking at here? 

Candice: [00:16:53] So more of a modest upside, I would say 14% still double digits, but that's based on, you know, it has rallied about 9% recently in the market. So you can buy it for 23 bucks. At the moment we have a UBS price target of $26.30. Pretty good. So that is my wrap on CarSales. Now, where are you going to hear the rest of the stocks to be added to the list for 2023? But before we do that, we'll just take a short break to hear from our sponsors. And we're back. Alright, Felicity. So what news stock or reader eight buy have you got for the list now?

Felicity: [00:17:29] So I'm going to go a bit left field here we have Apiam Animal Health. The code is A-H-X on the ASX. Now they actually engage in the provision of vet services, genetic and laboratory services, wholesale and retail. So it actually operates in the following business segments dairy, mixed feedlots and pigs. Now it offers veterinary production technology, genetics, warehousing, logistics and wholesale services. Now this is a micro-cap, so it's 110 million market cap. So it is highly speculative. 

Candice: [00:18:02] Interesting. Okay. I do love anything to do with animals. You know, for our listeners, you've probably heard us talk about our own dogs for he's got to I've got one. So let's talk about the highlights and I guess, why would this be a stock that I might want to add?

Felicity: [00:18:18] Okay. So I think what's really interesting is the recently announced acquisitions of two mixed animal vet businesses in strategic New South Wales regions. So we've got Singleton Vet Hospital, which is located in Singleton and Frankston. So near your area? Somewhat Candice Yeah, as well as Merimbula, Pambula and Eight and vet clinics. Now all three clinics are operated together by joint vet founders, and all clinics are mixed animal clinics with most revenues derived from rapidly expanding companion animal services like our puppies. Now the acquisitions are expected to add approximately 8.3 million in revenue and 1.9 million in a bid to Apiam on a fy22 normalised basis before accounting for any other synergies. Apiam has strong regional expansion strategy into targeted areas where we believe they've got strong vet and market potential remains a key growth pillar for this company. You know, they're continuing to accelerate their growth plans to increase pro-forma revenues to 300 million by FY 24, and that will increase overall group earnings margins.

Candice: [00:19:26] And so in terms of recent updates, because I guess a trend was that we all got puppies riding Covid, So you would assume this is going straight to their bottom line, right? 

Felicity: [00:19:35] Yeah. So look, they've recently reported a few key take outs, gross profit of 29.7 million, so that's up 42% year on year, which is really good. All divisions are growing for the first time since we've actually taken coverage over it. So revenues were 45.4 million, which is 31% year on year. And my third point here, and I guess the key take out is the mix really continues to improve towards less wholesale animal segments with about 70% in companion mixed and your horses and the remaining 30% in more of the wholesale animal segment. So that's really interesting. And probably from Covid. 

Candice: [00:20:13] Yeah, because all you covered puppies are like two three years old now. So you know, more potential vet visits on the horizon. So new, I'd love it. What is the upside and I guess finalising the catalyst to come. [00:20:26][13.0]

Felicity: [00:20:27] Yeah, so look, they had a really solid start to FY 23 and as leverage comes through, the stock should actually rewrite accordingly. Furthermore, rural conditions bode well for several strong players and they really present a large integrated rural player in VET and wholesale animal clinics. So I'm going to add this to our order pad as a by watching for the next catalyst, which will be the AGM. The price target of four assurance partners is $1 five current prices around 62%, so upside will be around 69% if they get it right and get a bit more traction in the market. So yeah. Apiam Health So Candice, what is your next stock for our order pattern? 

Candice: [00:21:06] So for my next stock, I'm going to go back to a buy call that I made at the end of 2021 Bit controversial. It's PayPal, but I'm still liking PayPal even though the stock has come off a shocking 30% in the last year. And if you are an investor in PayPal, you know, you would have seen the massive fall off the cliff that it basically had it got as low as $69 US per share. 

Felicity: [00:21:30] Yeah. So this stock has been one of the 22 tech tragedies. But tell us how did that earnings results compare with expectations? 

Candice: [00:21:39] Yeah, so we've just recently wrapped US earnings season, right? So while the Q3 22 earnings exceeded expectations to a lot of the Street's guidance, paper management did lower their 2022 revenue targets for negative macro environments, combined with a reduced internal US e-commerce growth forecast. So it's it was a bit of expected result for the business, but now it's in a low single digits versus mid-single digits previously. Another thing I noted was that Piper management also provided preliminary 2023 financial guidance, which included at least 100 basis points of their non-GAAP operating margin expansion up from about. 50 basis points previously. So that's at least 15% non-GAAP EPS growth there, implying 4.70 of EPS per share compared to the street of about 41. So a little bit of a miss on the EPS there. 

Felicity: [00:22:36] Yeah, no, that's really interesting and positive. I think that the management is, you know, has high conviction in their delivery. So I actually saw a new announcement. So can you tell us a little bit about that? 

Candice: [00:22:46] Yeah. So while the like quote unquote downgrades, you know, are great on paper and we were expecting, you know, that from the announcement. I think the positive news was the announcement that there's a new partnership with Apple and that allows PayPal merchants to leverage off the apples tap and pay iPhone technology. It adds Apple Pay as an option in the PayPal branded checkout, which is great, fully integrated, and it allows the US customers to add PayPal and Venmo branded cards to the Apple wallet. So even better to see two big us, you know, tech companies getting into bed together, so to speak. So given this increasing competition in the space, I believe this is a great partnership for people's ability to safeguard its competitive advantage while expanding its reach.

Felicity: [00:23:35] Absolutely. And look, I use PayPal all the time. So, look, we've noticed the share price slowly creeping back up in the last month. What do you think is in store for PayPal this year? Yes. 

Candice: [00:23:45] So I still believe PayPal's issues are largely macro driven. And they will have, you know, not just a shoot up in terms of share price experience along with their revenue. So it's going to be a slow and steady, but I still have a conviction on it because I believe it still continues to execute well in its growth initiatives. And I think it's a buying opportunity. So I'm sticking with my buy call. I think with the potential to generate 15%, like I said, EPS growth in the next year. PayPal looks undervalued at current levels, trading at 12 times based on our FY 24 estimates. So you can pick the stock up for about 82 bucks at the moment. And UBS have a price target of $125 per share. 

Felicity: [00:24:25] So I guess we could maybe if you've already bought this, it could be an idea to kind of dollar cost average, reduce your cost base. I'm sure there's going to be a little bit more volatility in the market. So you might be able to get it for a really good price 100%. 

Candice: [00:24:37] That's what I've been doing, sticking to my guns. And so hopefully the dollar cost average proves right and about 52% upside if you're buying new at these levels to the price target. So PayPal PYPL add it to your order pad. Alright, we're at stock 22, so two to go. Felicity. What's your next one? 

Felicity: [00:24:55] Okay, so I've got a new buy here. Now, if you've been in other diversified fund managers, they probably haven't done so well. This could be a consideration to switch into Regal Partners. Now the code is RPL, right?

Candice: [00:25:08] Are you alluding to the sell on Magellan that I had a little while back.

Felicity: [00:25:11] And maybe. 

Candice: [00:25:13] That's been changed? All right. So give us a background on Regal. 

Felicity: [00:25:16] Okay. So Regal Partners provides alternative investment management services that provides investors with access to a diverse range of strategies covering hedge funds, private markets, real estate assets across a multi boutique strategy. Now, Regal is actually one of Australia's best performing and most awarded alternative asset management operation and enjoys a really high alignment of staff ownership, which is always important. Now the market cap is just shy of one bill at 959 million. 

Candice: [00:25:45] I love a strong market cap. 

Felicity: [00:25:47] She loves anything over 1 billion. Now IPL actually delivered second half of 22 Update rolling off what was a really eventful half for the group that included an attempted major takeover. Now the largest mandates, actually one in group history with the merger with VDI and RFM, I'm not sure if you saw that the capital raise and, you know, obviously it was very hard for these alternative asset managers during 2022. 

Candice: [00:26:12] Yeah, very much so. So be interesting to see if they do make more key acquisitions this year. Right. Because quote unquote, the IPO market in this space, in the funding space is really tight. So what about any more highlights that you want to bring to the table? And I guess why is it a buy. 

Felicity: [00:26:26] When they've got a lot of cash on the balance sheet? Be sure that there's going to be more M&A activity. So I think it's been really the most fertile period of FUM gathering in history. I think what I really want to highlight is the merger of CGI and Regal to create Regal Partners, which is now seeing an acceleration in net flows via larger groups. What's really critical is they saw flows of 800 million, including a mandate for an institutional fund which is 470 mil. Whilst RPL has announced private credit has attracted a major family office for an initial 200 mil, they've also got the option for follow up of 100 mil. So that'd be really interesting. Now we note that RPL is attracting some of the highest net flows to fund size over 15% at the moment. Now it's double, especially platforms such as net wealth reference and comparable to large industry super funds such as HOSTPLUS, which has 4 billion calendar year 2022. So they're in. Join a lot of superannuation inflows at the moment. [00:27:24][58.1]

Candice: [00:27:25] Yeah, definitely. So just coming back to the by conviction, I guess what if you're thinking about buying this stock, what is it trading on and what's the upside? [00:27:31][6.4]

Felicity: [00:27:32] All right. So post the worst MSCI Global Index performance since the GFC last year, RPL really enjoys best in class leverage and is going places in funds management with performance fees and M&A upside. So they also pay a little dividend of 2.7%, which is nice. Our price target is 6.08. Current price is 3.64. So that is upside of about 67%, that is another double digit for you. [00:27:59][27.5]

Candice: [00:28:00] Love it. Absolutely Love it. 

Felicity: [00:28:02] Okay, Candice, finish us off. What is your last stock for 2023? 

Candice: [00:28:07] So to round out 2023 with investable ideas, I want to share a final thought on a thematic investment idea for you. 

Felicity: [00:28:15] Well, we love that. So we did have uranium. Now we're going to have. 

Candice: [00:28:19] AI as a theme. So in our view, the robotics and AI theme sits at the crossroads of multiple structural trends that are expected to increase adoption in the coming years. So rising inflation, supply chain disruptions , deglobalisation and ageing population all firm up The opinion that the globe is really exploring all the different options and solutions to enhance manufacturing efficiency and reduce costs. How do you do that? You get technical and you go down the robotic air route, right? 

Felicity: [00:28:50] Absolutely.

Candice: [00:28:51] As automation becomes increasingly more capable, cheaper and easier to implement, just like we saw with renewable energy solutions, I think we're going to see a lot of firms really accelerate into this space. And it's very topical at the moment with the latest Microsoft announcement. So to give you three top ideas and the theme, we're going to concentrate on the US market because the United States makes up just about over half 54.15% exactly of total global expenditure in the AI space. 

Felicity: [00:29:23] Okay, so let's go global. So what are your top three picks here in the AI space? 

Candice: [00:29:29] So in no particular order, I'm going to go with the lowest hanging fruit that comes to mind, which is Microsoft. So you would have all seen that they increased their announcement in this space. They actually have now put on the table 10 billion for the full takeover of open AI, which over the years the success of Chat GPT has really proven how much the AI space is growing massively. They actually aren't new to this space. So back in 2019, they invested $1 billion and according to reports on the street, Microsoft will receive 75% of open AI's profits until it makes back its initial investment, after which at that point it will gain 49% of the full stake in the firm. But now this is old news because they're just going to buy the whole firm for 10 billion bucks.

Felicity: [00:30:17] Wow. I mean, that is really great.

Candice: [00:30:19] So I think we're going to slowly see Microsoft benefiting more in this stock price going up. And we expect Microsoft will continue its track record of generating double digits revenue growth for the next three years, at least to come. So consensus price target around $278 for Microsoft, so about 10% upside.

Felicity: [00:30:37] So let's go to their main competitor then would be Google. 

Candice: [00:30:41] So that would be my next one I want to bring up. So Google and YouTube parent company Alphabet uses AI and automation in virtually every aspect of the business, from ad pricing to content promotion to Gmail, spam filters, you name it, it's everywhere. Also the parent company of AI's software subsidiary DeepMind. So you probably didn't know that. And that actually is the autonomous vehicle company Waymo, which made history by launching the first fully driverless commercial taxi service on public roads in 2020. 

Felicity: [00:31:14] And I love the name DeepMind. So what is the consensus price target and upside from current levels?

Candice: [00:31:20] So double digits upside of what we can see 20% felicity to a price target of $123 per share. I love. 

Felicity: [00:31:27] It. Double digit. So we've got first we have Microsoft, then we have Google. What's the third one? 

Candice: [00:31:33] So the final one, because there's so many companies, but it's want to highlight these three, it's Amazon. So again, Amazon similarly is integrated into nearly every aspect of its business. They've got targeted messaging and advertising, e-commerce, search algorithms, Amazon web services, cloud computing, etc., etc. The list goes on. But probably the most, I guess famous AI aspect would be Alexa, which is one of the most popular virtual assistants globally. You know, it's just commonly here at every household you pretty much go into these days. 

Felicity: [00:32:06] Yeah, definitely.

Candice: [00:32:07] So I think this one's another no brainer. And back in late November 2022, Amazon unveiled its new warehouse, which has got a full robotic arm called Sparrow, another cool word, and that uses computer. Vision and AI capabilities to move products from various sizes prior to boxing. So really cutting down the human impact there to drive more efficiency.

Felicity: [00:32:34] Absolutely. I love these good names. Right. DeepMind Sparrow. Yes. What is the consensus price target and upside from current levels? 

Candice: [00:32:43] So price target of around $132 per share, which is about 29% upside. So Amazon, Microsoft and Google. No particular order, just like those three US names. But there's more. There's Nvidia, there's IBM, there's Workday to name a few. 

Felicity: [00:32:59] You've got quite a lot there. And look, I can't ignore here in Australia Weebit Nano. The code is W-B-T. Since we had Kobe on the show on the 19th of August 2022 was around 2.77 per share. The price is now 5.43. Now we don't actually have any formal coverage on we bid, but I still believe this is a really great business in the semiconductor and what he alluded in the air space, definitely. 

Candice: [00:33:24] So if you're looking for an Aussie exposure, go back and listen to that interview episode. But if you're not into the direct stock idea and perhaps you just want to play thematic, a couple of ETFs that we like to use would be the Betashares Robotics ETF. RBTZ is the code or the global X one Robo Robo. 

Felicity: [00:33:43] Yeah, that takes a little bit of the heartache out of stock picking, doesn't it? 

Candice: [00:33:46] 100%. 

Felicity: [00:33:47] Well, that is a wrap. I can't believe we did 23 stocks for 2023. How good? Now a little bit of housekeeping before we go. The Equity Mates community survey is live. There's two prize pools for each community member who'll be automatically entered. So the first is $500 cash. Woohoo! And the second is three free tickets to FinFest this year. It closes on the 28th of February. So you still have a little bit of time, but I would get a moving to end that survey. 

Candice: [00:34:15] Now survey only takes 10 minutes guys, so it's super easy to do on your lunch break. The event is locked in for November the 11th, 2023, back at Carriageworks in Sydney. So jump on any of the Equity Mates show social media platforms to find out more information. So that is a wrap. So before we sign off, please remember, although Felicity and I are financial advisors at Shaw and Partners, as always, our chat today does not constitute as personal financial advice. And as always, if any of these stocks or investment ideas has piqued your interest, feel free to reach out to us. We'd be happy to have a chat. Felicity, How do they reach out to us? 

Felicity: [00:34:52] Yes, you can reach out to us on our social media channels or send us an email which is displayed in our show notes below. Again, make sure you follow the Talk Money To Me Podcast for daily market updates. Until next 

Candice: [00:35:05] See you then.