1.
$Amazon.com(AMZN)$ , $Microsoft(MSFT)$ , and $Alphabet(GOOG)$ are must-own stocks for the next decade.
Even if their cloud businesses grow only by 20% annually, they will together generate $683 billion revenue in 2030.
They'll still have a decade of runway for low double-digit growth beyond that..
Insane..
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2.
$Hims & Hers Health Inc.(HIMS)$ is the next big ecosystem business.
It's not just selling compounded medicine, but also leveraging its distribution network to become a full-service healthcare platform.
Here is why it's a 4x opportunity from here: 🧵
1/ Investors thought HIMS was just a compounder.
They ditched the stock when GLP-1 shortage ended.
This is like buying Amazon stock in the early 2000s when a new Harry Potter book was to be released and ditching it afterwards.
Yet it was Amazon being built.
2/ Yet, HIMS revenues were exploding long before GLP-1 was around...
HIMS grew revenues every quarter since it became public, and GLP-1 wasn't even around until Q2 2024.
This is just the beginning...
Let me explain:
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3/ HIMS growth was driven by product sales so far...
It integrated its tele-health platform with direct sales to customers.
It picked chronic conditions such as hair loss and sleep to create a continuous relationship with its customers.
This was a genius strategy.
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4/ This strategy allowed it to build a subscription-based business, as those people continuously needed treatment.
It built its subscription base, which made the upsells and cross-sells exponentially easier.
Now, more than 56% of all subscribers are on personalized plans.
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5/ Conversion of generic subscribers to personalized subscription plans extends the lifetime customer value.
Customers with personalized plans are less likely to leave the platform or search for alternatives.
Result? Margins have been expanding exponentially.
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6/ Naturally, net income and free-cash-flow exploded.
It became profitable last year and generated $126 million in net income and $209 million in free cash flow.
What's even better is that it achieved all this by not leveraging its balance sheet at all.
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7/ Its balance sheet is rock solid.
It has nearly no debt while it holds around $476 million of equity, and its EBITDA stands at $83.1 million.
Meaning?
It can weather even the strongest financial storms, and it has a wide legroom to invest to drive growth.
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8/ It has many opportunities for growth.
It's launching three new segments this year: Diabetes treatment, cholesterol and low testosterone.
Beyond those, it has also partnered with Novo Nordisk to sell its weight-loss drugs on HIMS platform.
It'll charge way less for the drug than the market price, and it'll make money by charging for access to personalized care.
9/ This is similar to the growth story of Amazon.
It built a customer base by low-cost offerings, and monetized the ecosystem benefits it built, such as 1-day shipping on Prime.
HIMS is doing the same.
Partnership with $Novo-Nordisk A/S(NVO)$ won't stay limited to weight-loss, it'll expand, and it can also add new partnerships.
This means that its product reach has basically become unlimited, and it can still make money by leveraging its platform power to make money through complementary services.
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10/ Valuation is attractive.
It can easily grow revenues by 30% annually in the next 5 years.
This gives us $5.5 billion in revenue in 2030.
At 20% net margin and 25 times final P/E, we get a $27 billion company.
It's currently valued at just $7 billion, meaning it can quadruple easily in the next 5 years.
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