EL is an undervalued quality stock; recovery in net income to ~$3B by 2030 implies ~200% upside.

E stock Estee Lauder is rolling now at this point in time. We're now up almost $57,000 on this one. Up another $8,500 here today. This is a stock I bought a lot of shares of over the past 18 to 20 months or so.

And you know, it was one of those that a lot of people had a lot of question about like what Estate Water and now people are seeing. Okay, this is actually a pretty decent stock, right?

Estee Lauder. So, this one's rolling for us about $57,000 now on Eel. Um, up another $8,500 here a day. It's rolling. Now, for a refresher, if people aren't understanding what Esteee Lauder is, it's a beauty company, right?

They sell makeup products. They sell cologn and perfumes and and skincare products and all that sort of stuff, right? And they own a bunch of different brands. They own Bobby Brown.

They own Clinique. I'm just going to go through a few of them. Obviously, Estee Lauder is a big one. Joe Malone. Oh, love Joe Malone. Uh, La Mer, I got La Mer. That's very expensive. skin moisturizer, Lobo, Lobo, and then uh they have MAC, they have Origins, they have a bunch of other brands as well.

So, just understand it's like a a house of brands, and they're all almost all the brands are on the higher end space.

So, they compete very differently than an E.L.F. E.L.F. is competing much at the lower end. Uh price points under $30 and a lot of ELF's products are even under $15, under $10, right?

EL's compete much on the higher end. you know, EL products from most of their companies like $50 plus, if not $100 plus. So, they're competing in a different bracket than somebody like um like an ELF will compete at.

Okay. So, here are my projections for EL stock over the next several years. My bull case for E has I'm doing 10% revenue growth per year on average. Now, they're they have a big profit recovery plan next, you know, going on right now that's already starting to show uh basically great results.

And so next year they should do at I would say probably right around $1.2 billion in net income. They might even be able to do better. So big growth rate next year and then after that have them going down to a 25% net income growth rate, right?

Gets them to net income margins of 10% come 2030. $22 billion of revenue in 2030, $2.3 billion net income.

Uh Eel usually trades at richer PE ratios. And the reason being is it's such a great quality company. And I know they went through, you know, a whole turnaround a couple years ago here, but it's such a great quality company that Wall Street's always willing to pay bigger valuations for EO than than uh, you know, some other random company or something like that.

And because they're protection with their business model, higher margins, those sorts of things, right?

So under the scenario, I get 17 to 22% compounded annual growth rate, which is very solid. My base case, just a fancy way of saying what I actually expect. 8% revenue growth on average.

Um, and then I had 20% net income growth on average 28 through 2030. This scenario gets them to $21 billion of revenue come 2030 and about $2 billion in net income. Right? In this scenario, I still get a double digit return 11% to 16% Kaggar.

Right? Now, you might look at that number, you might say, gosh, man, like that's not that exciting. Like, yeah, it's going to outperform the S&P 500, but you might look at that and say like that's not that great.

Well, I'll push back against that. Okay, so here here's where my push back would be. It's on several different fronts. One is you're paying for protection with the stock. My bare case my bare case for E still has a stock going higher over the next few years.

It's very not very often you can run a bare case and you're still getting a positive return on that stock over the next four four years or so, right? So, that's something to to keep in to take into account.

In my bare case, I'm only getting 19.6 6 billion in 2030 and then $1.8 $.8 billion in net income only 9% net income margin that'd be very bad for EL very bad and 23 to 28p and I still get likely you know a kaggar of five or 6% over the next few years so you're paying for protection right

the other thing you got to take into account that must be considered is the company could do a ton of share buybacks over the next few years right with all this new cash flow that's going to be coming in for the company uh they can also buy out other brands this isn't something that's uncommon for them they've done this many times before.

So, they could buy another brand that helps their revenue go up much faster and their net income go up much faster. Right? This also has to be considered.

Remember, my most bullish scenario, my most bullish scenario for this company has them only getting only getting to $2.3 billion of net income in 2030. Right? Keep this in mind.

In 2021, the company's best year for net income, they did 2.87 $27 billion billion dollar of net income, right? And so my 2030 bullc case doesn't even come close to that.

And so then you got to say, okay, what happens if if they get to around that number, around a $3 billion number? Well, if they get around a $3 billion number, then the market cap's probably going 90 billion, right?

Because you say 30 PE out of $3 billion net income, right? Probably going $90 billion market cap. So we're talking about that's like 200% upside from here, right? Significant. So that's something that should be considered in regards to EL stock.

And you know, that would be a scenario where you're getting a compound annual growth rate, you know, obviously deep deep deep into the uh 20s or even the 30s at that point in time. So something that should be considered.

Additionally, do keep in mind this stock has an all-time high. You know where it was? $370 at the end of 2021. 370. 370. It's $101 here today.

And so when I look out there at EL, I understand like it doesn't look like the sexiest stock, but I don't think it ever has. And look at how it's starting to return for us. Right?

That's the thing with the stock. It's never been the most exciting. It's never been the one like like I made a joke in the private group the other day. I said, you know, Eel was having a great day.

I think it was up 16% or 17%. I said, "Hey, congrats to all uh you know, six people in here that own EL stock or something like that." And like the chat was dead. Like whenever whenever in the Discord chat uh there's a stock that's having a great day.

It's up 16% 17%. The chat's usually going crazy. I looked and like I think like four people had posted on the EL chat like you know people just aren't interested in that stock and I'm like you know many times these female focused brands are way overlooked way overlooked by you know a maledominated investor base right cuz I mean 90% of my channel is males only 10% of the people that watch my channel are females same thing with the private group private group is probably 90% men and so men tend to overlook these brands that don't resonate with them, right?

They're like a makeup brand, beauty. There's a lot of money to be made in that industry.