Weekly Stock Analysis
11/25/24
Arch Capital Group Ltd. is a global insurance and reinsurance company that provides a wide range of property, casualty, and specialty insurance products. The company operates through three main segments:
Insurance – Offering a variety of insurance products, including coverage for property, casualty, and other specialized areas such as cyber and aviation.
Reinsurance – Providing reinsurance solutions to other insurers, covering risks in areas like property, casualty, and specialty lines.
Mortgage Insurance – Offering credit risk insurance for residential and commercial mortgage markets, helping lenders manage risks associated with loan defaults.
Arch Capital serves clients across the globe, with a focus on managing risk and providing financial protection in complex and volatile markets.
Arch currently is sitting at support and valuation, balance sheet, and growth remain compelling
Arch Capital Group Ltd has grown revenue at 30.27% over the past year, which is strong growth. Also, it has seen its net income increase by 93.65% over the past year, which suggests its profits are growing at a strong rate.
Like buying shares here under 100, with a first target of 105, then the gap fill around 113
Kaspi.kz is a leading financial technology and e-commerce platform headquartered in Kazakhstan. It operates as a multifunctional ecosystem, integrating digital payments, online shopping, and banking services. Kaspi.kz provides consumers and businesses with a wide range of services, including:
Payments and Fintech Solutions: Through its super app, Kaspi.kz enables users to make seamless payments for utilities, services, and goods. It also offers peer-to-peer transfers and QR-based payment solutions, making it a vital part of the cashless economy in Kazakhstan.
Marketplace: Kaspi.kz runs one of the largest e-commerce platforms in Kazakhstan, connecting buyers and sellers. It facilitates product discovery, payment processing, and delivery, offering a comprehensive shopping experience.
Digital Banking: The company provides innovative banking services such as deposits, loans, and credit solutions, catering to both individuals and businesses. Its mobile banking system is renowned for its simplicity and accessibility.
Financial Inclusion and Accessibility: By combining fintech, banking, and commerce, Kaspi.kz plays a key role in enhancing financial inclusion and supporting small businesses in the region.
Kaspi is another very compelling name here, the valuation looks like a steal but I believe this is because risk is being priced in currently for escalation in the region and risk of growth outside of its home country.
Kaspi.kz AO has grown revenue at 37.95% over the past year, which is strong growth. Also, it has seen its diluted average shares outstanding decrease by -1.31% over the past year, which suggests the company is buying back shares.
Like DCA (dollar cost averaging) into shares here as this growth story continues to unfold. I do believe with a new US administration worries of war escalation will decline, and leadership within Kaspi has already started a strategy of buying financial companies within regions it wants to grow, similar to what Sofi did here in the US getting a bank charter, it is a smart concept of overcoming regulation to begin growth in new countries. Very strong leadership group here.
Merck specializes in the research, development, and manufacturing of medicines, vaccines, biologic therapies, and animal health products. Merck focuses on addressing critical healthcare challenges in oncology, infectious diseases, cardiovascular conditions, and immunology. Key aspects of Merck’s business include:
1. Pharmaceuticals
Merck’s pharmaceutical division is its largest revenue driver, with a portfolio that includes treatments for cancer, diabetes, and other chronic and life-threatening conditions. Its flagship oncology drug, Keytruda (pembrolizumab), is one of the world's leading cancer immunotherapies, used in the treatment of multiple cancers including lung, melanoma, and head and neck cancers.
2. Vaccines
Merck is a leader in vaccines, producing highly effective vaccines for diseases such as HPV (Gardasil), hepatitis, and shingles.
3. Animal Health
The company also has a robust animal health division, offering vaccines and treatments for livestock and pets, helping ensure global food security and pet care.
4. Research and Development
Merck invests heavily in R&D to drive innovation, with significant efforts in oncology, immunology, and infectious diseases.
Risk of Keytruda Coming Off Patent
Keytruda, Merck’s best-selling drug, is a major contributor to its revenue, generating tens of billions annually. The patent protection for Keytruda is expected to begin expiring in the late 2020s, exposing the drug to potential biosimilar competition. This poses a significant financial risk, as competitors could develop biosimilar versions at lower costs, potentially eroding Merck’s market share.
At its current valuation, Merk is a compelling investment. The Keytruda risk is valid and appears to be priced in, now look at its pipeline.
The upside seems tremendous for this cash cow that pays a strong dividend while investors wait for this to play out.
I like shares under a 100, with first target of 106, and then 113.
Each week we will be sharing a new list of companies with analysis for long or short positions.
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