Autodesk is a software company that provides design and engineering solutions to industries, including architecture, engineering, construction and manufacturing. The company's transition to a subscription-based business model has resulted in predictable revenue growth and improved profitability.
Discover Financial Services is a leading digital banking and payment services provider. The company has achieved consistent growth and profitability in the competitive financial services industry. It also has notable shareholders including Berkshire Hathaway.
Autodesk, Inc. ($ADSK)
Source: TradingView
???? Summary:
Share price at the time of writing: $194.09
- Autodesk Inc. is a software company that provides solutions for design, engineering, construction, manufacturing, and digital media industries.
- The company has a diversified customer base that includes small and medium-sized businesses, as well as large enterprises.
- Autodesk is known for its flagship product AutoCAD, a computer-aided design (CAD) software that has been widely used in the architecture, engineering, and construction industries since its launch in 1982.
- The company has been transitioning to a subscription-based business model, which has resulted in predictable revenue growth and improved profitability.
???? What they do:
Autodesk provides a range of software solutions that cater to different industries and use cases. These solutions help customers design, visualize, simulate, and collaborate on their projects.
The company's product portfolio includes AutoCAD, Revit, Fusion 360, 3ds Max, Maya, and many others. These products are available as subscriptions or licenses, depending on the customer's needs.
Autodesk also provides cloud-based solutions that allow customers to access their design data and collaborate in real-time.
The company has been expanding its product offerings through acquisitions. Recent acquisitions include PlanGrid, a construction productivity software company, and Spacemaker, an AI-driven platform for building design optimization.
???? What we learned from social media and institutional investment patterns:
Autodesk’s target audience is fairly niche – they target design professionals, engineers and architects. As a result, there is not much social media buzz around the company.
The company's institutional ownership is high, with 89.01% of the float being held by institutions. The largest institutional investors are Vanguard Group, BlackRock, and State Street Corporation.
Insider ownership currently sits around 13.36% of the shares.
???? Why $ADSK could be valuable:
Autodesk operates in industries that are experiencing rapid digital transformation. As a result, there is a growing demand for software solutions that help companies optimize their design and production processes.
The company's transition to a subscription-based business model has resulted in predictable revenue growth and improved profitability. In FY22, Autodesk reported $4.2 billion in revenue, up 15% YoY. The company's operating margin was 17.7%.
The company has been expanding its product offerings through acquisitions. These acquisitions have helped Autodesk broaden its addressable market and offer end-to-end solutions to customers.
Autodesk's focus on sustainability has been well-received by customers and investors alike. The company has set ambitious goals to reduce its carbon footprint and help customers achieve their sustainability goals through its products.
The company has a strong balance sheet, with $3.6 billion in cash and equivalents and $2.1 billion in debt as of FY22.
Analysts are bullish on the stock, with a consensus rating of “Buy” and an average price target of $230.33.
⚠️ What the risks are:
1️⃣ Competition. Autodesk operates in highly competitive markets, and faces competition from both established players and startups.
2️⃣ Economic conditions. Autodesk's business is tied to the health of the industries it serves. A slowdown in these industries could lead to lower demand for the company's products and services.
3️⃣ Integration risk. Autodesk's recent acquisitions have helped it expand its product offerings, but integrating these acquisitions successfully could be a challenge.
Bottom line: Autodesk is a well-established software company with a loyal customer base and a strong focus on sustainability. The company's transition to a subscription-based business model has resulted in predictable revenue growth and improved profitability.
Discover Financial Services ($DFS)
Source: TradingView
???? Summary:
Share price at the time of writing: $105.52
- Discover Financial Services is a leading direct banking and payment services company that offers a range of financial products and services to consumers, businesses, and institutions in the United States.
- The company is known for its flagship Discover card, which is a popular credit card with features such as cashback rewards and a robust rewards program.
- Discover is also a major player in the personal loan market, providing competitive rates and flexible loan terms to borrowers.
???? What they do:
Discover Financial Services offers a wide range of financial products and services, including credit cards, personal loans, home equity loans, student loans, checking and savings accounts, certificates of deposit (CDs), and online banking.
The company has a strong focus on customer service and has been consistently recognized for its high levels of customer satisfaction.
Discover is a direct bank, meaning it operates entirely online and does not have any physical branches. This allows the company to keep its costs low and offer competitive rates and fees.
It's key products include:
- Discover Credit Card – a popular credit card with competitive rates, cashback rewards, and a robust rewards program.
- Personal Loans – flexible loan terms and competitive rates.
- Online Banking – a user-friendly online platform with features such as bill pay, mobile deposit, and budgeting tools.
???? What we learned from social media and institutional investment patterns:
Discover Financial Services ($DFS) is a prominent figure in the financial services sector, garnering occasional attention on social media platforms. Nonetheless, its focus on the financial industry and absence in other consumer markets may restrict its overall visibility.
Activity on r/wallstreetbets is minimal.
Mentions of $DFS appear sporadically on r/stocks and other subreddits, but posting frequency is irregular. Even during times of considerable stock price fluctuation, engagement has been generally moderate. A viral spike in interest seems improbable.
Insiders own approximately 24.8% of the shares, a noteworthy amount. Institutions hold 62.9% of the float, which is fairly sizeable at 72.2 million shares. A total of 724 institutions have a stake in the company, with Blackrock and Vanguard each owning slightly over 8% of the float.
The substantial float and high degree of institutional ownership suggest that the stock is less prone to significant price fluctuations due to retail investor activities.
???? Why $DFS could be valuable:
Discover Financial Services is well positioned to benefit from the ongoing shift towards digital banking and payments.
DFS's strong brand presence and reputation for excellent customer service can be leveraged to enter new markets and form strategic partnerships. By collaborating with other industry players or expanding into untapped markets, DFS can diversify its revenue sources and reduce dependence on traditional financial products.
Discover has a strong track record of financial performance. In the most recent quarter, the company reported a 23% increase in net income and a 16% increase in revenue compared to the same period last year.
Discover is also well capitalized, with a strong balance sheet and healthy levels of liquidity.
DFS's credit card portfolio has performed well, with solid growth in loan receivables over the past few years.
Discover has a diversified revenue stream, with revenue coming from both credit card operations and personal loans.
DFS is investing in technology to improve its digital capabilities and enhance its customer experience.
Discover has been actively expanding its product offerings, including launching a new checking account product in 2021.
DFS has a strong dividend history, with consistent dividend payments and a current yield of over 2.65%.
⚠️ What the risks are:
1️⃣ Competition from other direct banks and credit card issuers, which could lead to margin pressure and reduced profitability.
2️⃣ Economic downturns and recessions could lead to increased delinquencies and defaults on loans.
3️⃣ Regulatory changes and increased scrutiny from regulators could impact the company's operations and profitability.
4️⃣ Discover's heavy reliance on credit card operations could leave it vulnerable to changes in consumer behavior or shifts in payment preferences.
5️⃣ Increased interest rates could lead to increased borrowing costs for the company, which could impact profitability.
Bottom line: Discover Financial Services have diversified the business since the financial crisis while taking on less credit risk. The company still reported solid profits during the last quarter despite taking a big credit hit already.
