Meta is a strong buy due to attractive fundamentals (high margins, ad growth) and low valuation relative to history, though high CapEx/debt issuance creates market discomfort.

Stocks like Amazon, Alphabet, and Meta are all aggressively issuing debt. A lot of them are even going free cash flow negative, such as Meta.

Now, coming in at number two, we do have Meta who fundamentally, again, looks very attractive. This is another stock that's trading below its historic average valuation multiple, and this is actually one of the worst performing stocks, at least Mag 7 stocks year-to-date, down by about 15%.

But, the three-year total return is still very strong. Now, they just recently started paying a dividend and the yield is small, but obviously there's a lot of dividend growth potential, and the margins on the stock are just incredible. It's the highest out of all the top 10 stocks.

So, what's the case for Meta? We can see over the last year now, it's down by about 25.62%. That's a substantial drawback for a stock that was once trading at almost $800 a share, now trading at around 560.

Well, again, we need to understand the overall business model for Meta. More than anything, this is an advertising business, and it's doing very well in that segment. The advertising segment grew 27% year-over-year in the recent quarter.

Just mind-blowing revenue growth for a stock already this large. And ultimately, that's possible because they're firing on all three variables. Daily active users was 3.6 billion on average for June of 2026, an increase of 3% year-over-year, but combine that with the fact that ad impressions was up 14% year-over-year, and then the average price per ad was up 12% year-over-year. That's how you get to 27% revenue growth.

Now, here's what's interesting when we look at the fundamentals for Meta in particular. If we jump over to the financial statements and take a look at revenue, what do you notice?

The slowdown in revenue happened in 2022. And really, this is because we technically entered into a recession. What do I mean by that? Well, we had two consecutive quarters of negative GDP, and typically, the first thing that happens when that occurs is we see a pullback in advertising revenue.

And that's essentially what happened to Meta stock. Meta was impacted by pullback in advertising revenue. So, it is something to be aware of when you're analyzing the business model. But obviously, since then, revenue has surged.

Now, what we do need to point out is the fact that the market is becoming increasingly uncomfortable with the amount of CapEx spending we're seeing from Meta, and we know this because the spread on their debt is getting wider and wider.

If you want to know how the market really feels about increased CapEx spending and debt issuance, then just take a look at what the bonds for each of these companies are doing.

What does the yield look like? What does the spread look like relative to Treasuries? And right now, Meta is significantly higher than their peers, obviously, with the exception of SpaceX and Oracle.

But as a result, they're trading at a P/E multiple on a forward-looking basis significantly lower than they have been historically speaking. With that being said, it's also mind-blowing to see just how cheap this stock got around 2022-2023.

Super investors absolutely love Microsoft, Meta, and Visa at these prices still. Microsoft and Meta are still trading well below the historic valuation multiples.

But these are for the most part historically capital light businesses, not so much now with the CapEx spending from Microsoft and Meta, but companies that generate high return on invested capital and have incredible gross profit margins.