SPGI是高质量业务，但目前估值过高；等待价格接近300美元时买入。

So, let's start with the best business of the three, S&P Global, with the ticker symbol SPGI. This company runs the largest credit rating agency on the planet, and it owns the S&P 500 index itself. Now, the stock is down about 12% this year, and most people see that and think that's been crushed. But, there is a massive detail almost everyone is missing. Back on July 1st, S&P spun off an entire division and handed it directly to shareholders as a separate stock. So, a big piece of that so-called drop is not lost money. It's value that was literally distributed to the people who owned it. What is left behind is a leaner, cleaner, insanely profitable company now trading at a lower price.

The moat on this business is unlike almost anything else in the market. You cannot just start a company tomorrow and convince the global bond market to trust your ratings the way they trust S&P. That trust was built over more than 100 years, and the S&P 500 index, trillions of dollars are benchmarked to it. You probably could not recreate that if you had unlimited money and unlimited time.

Last quarter, the ratings business grew 17%. The index business grew 20%. Both of those segments run at profit margins around 70%. That is elite in any way, shape, or form for any company.

Overall adjusted earnings jumped 23% at a 54% profit margin. The company's buying back over 7 billion of its own stock this year.

And here's something people are overlooking. AI might actually be a tailwind for the S&P, not a threat. AI models need massive amounts of trusted, verified, high-quality data. S&P has been collecting exactly that for decades.

About half the company grows at a much, much slower pace than those two superstar segments. That slower half drags the overall numbers down. And the ratings business is directly tied to the economy. If we hit a recession and companies stop borrowing or borrow a lot less, that high-margin engine slows way down.

There's also a legitimate AI risk to part of the data business. And analysts who used to spend hours digging through S&P's research tools might soon just ask an AI to do the exact same work in a matter of seconds. S&P's entire strategy depends on becoming the trusted data source that powers those AI tools, not getting replaced by them.

So the big question is this: Has the price dropped far enough to justify paying up for one of the best businesses in all of finance? Most people look at the price of the stock as the price of the company. I do not. It's the market cap, cuz that's the number of shares outstanding multiplied by the stock price. So this is a $130 billion business if you want to buy every share outstanding. Next, we have the enterprise value, 152 billion. This is the number of buying all the shares, paying off all the debt, and emptying all the bank accounts and putting them in your pocket. If you did that, the company would cost you 152 billion, but you'd have no debt on the company. This difference of 22 billion is essentially their debt, net debt.

Now, is that good or bad? Well, we have to compare it to the free cash flow. Last year's free cash flow was 5 and 1/2 billion. Over the last 5 years, they've done 4.13 billion a year. So, that's definitely getting better, which helps the case of saying, "How could the business be getting worse if free cash flow is getting better?"

So, they're about four times uh four times their free cash flow last year in terms of debt. Not not bad, not amazing like some of these other companies like Meta or Nvidia, but it's still pretty good.

Now, returns on capital. I like their 5-year average return on capital. This is a quality metric, just as much actually probably more than a quantitative metric. This is 15% for the last 5 years, 8% last year. So, is this going to become a trend here coming soon where the returns on capital go lower? Like I said, it's a quality metric. This says that the company over the last 5 years has done a great job of getting a good return on the money that's in the business. That's a very, very good metric.

Next, so this is what's interesting about their profit margin. The last 10 years was 29 and 1/2% the last 5 years was 28 27 and 1/2. Last year was 30.5%. So, it's a little bit all over the board. Is it more of the last 10 years, more of the last 5 years, or is their last 1-year number going to lift us all up again?

Guys, here's what the other thing I love. They've actually been a net seller in their company. So, they've sold off about 3.74 billion dollars worth of businesses over the last 5 years total. But here's what's interesting. Their revenue growth of the last 10, 5, and 3 years 11 and 1/2, 15 and 1/2, and 10%. This is awesome. So to me, they've been selling cut divisions, but yet their revenue is still growing.

Now guys, they're selling for 24 times free cash flow and 26 times earnings. Why is the PE ratio higher? Well, their free cash flow is larger than their net income by a good amount. I like that. It's about 10% higher. That's a good metric to look at. I like seeing when free cash flow is higher cuz most investors only look at net income.

Let's go check out the eight pillars right now. All right. So it's got six of the eight check marks. Now, high returns on capital, shares are actually down 13%, which means if they're buying back cheap shares, they're doing good thing for their investors. Cash flow is up 2 billion, net income is up 2 and 1/2, revenue is up 8.3 billion, and reasonable debt. It's just these 5-year PE and 5-year price to free cash flow that's a little bit of an X. But again, that alone does not tell us if a company's expensive. Cuz if they can grow their profit 20 30% a year for several years, that's cheap.

So let's see what analysts think about that. And guess what guys, analysts have the profit growing from 18 to $27. It's a 50% increase over the next 4 years. So it's about high single digits, low double digits growth rate. Not incredible, not bad. With revenue down 3% this year and growing 5, 7, 5 and 1/2, and 5.3%.

But I want to remind you, if we hit a recession this time, it's going to change all of these numbers. That's why for a company like S&P Global, you need to look on a longer scale. And if you're in the middle of a booming market like we are now, make sure you make assumptions that are a little bit less than what they've been doing during a good economy.

I'm doing a 10-year analysis. I did 3, 5, and 7% revenue growth. I'm fine if you do 2, 4, 6. I can make that argument saying, "Well, the next 10 years we'll probably have a recession cuz we tend to have one every 4 or 5 years." So, these are kind of it's kind of like an in-between, what do you do here?

Next, I'm focusing on free cash flow here. As you can see, it's higher than profit margin. So, I put in 33, 34, and 35. Guys, I'm actually going to change this. I'm actually going to go 30, 32, and 34. Cuz I'm going to assume that coming off a booming recent few years, that it's probably going to die down just a little bit.

Next question. What PE and price of free cash flow would I assign to this company 10 years from now? Not today, not 5 years from now, not the average over the next 10 years. 10 years from now, what PE should this company justify? Now, this is a hard one to There are a lot of people that get their head around. The average over long periods of time on the S&P is 15 or 16. But guys, that includes good companies and bad companies. That's why our return on capital is important. This is a quality metric. This is a better company. This has a moat. They control this industry and it's hard to kick them off that. So, I put in 14, 18, and 22. Is that reasonable? I can understand going higher. But I went lower because the growth rate's kind of like tempered a little bit.

And then finally, I always tell people do a 9 to 10% return. Because my goal here is not to say, "What price do I want it for?" My goal here is to say, what is the intrinsic value? What's the company worth if I were to match the market 9 or 10%? But you got to remember, you need a margin of safety. How do you get that? You put a higher number in here than the 9 and 1/2%. But for purposes of finding out what the company is worth, I put in these 9%.

So, I run the stock analyzer. I have a low price of 235, high price of 470, middle price of 334. Guys, the stock is currently at 440. Based on my middle assumptions, if I paid today's price for it, I'm looking at a return about 5.9%. So, for me, not exactly what I'm looking for here. But it's a quality company, so I'm going to add it to my watch list. And I'm going to add to my watch list at around $300 a share because I need that margin of safety. So, I took my value of 335 and gave it a little bit of a discount. It allowed me to then get notified by our software and I can go run the numbers again.

Let's go check out what analysts think. Ooh, analysts seem to be optimistic about this. $11.80 per share this year, growing to $25 per share in 2031. That's a lot of growth potential.

With revenue growing from 41 and 1/2 billion to 70.5 billion, which is basically basically 10% growth every single year. That's what they're banking on. So, for the next 10 years, I went conservative. I did 5, 7 and 1/2, and 10% revenue growth. Next, I focus on free cash flow. I did 25, 30, and 35%. You can see the free cash flow over the last 10 years getting a lot better. Ironically, not ironic, so are the returns on capital. So, even though the returns on capital are lower, they are getting better. Next, my PE for 10 years down the road, I put 14, 18, and 22, mostly driven down by the returns on capital. And finally, I got to change this to my 9 and 1/2% return across the board.

And according to my assumptions, I have a low price of 200 based on cash flow, a high price of 550, with a middle price of 340. So, if my middle assumptions occur, based on my multiple free cash flow, I can expect a 14% annualized return.

But, they are taking on more debt, but not as much as the next company we're going to talk about.