After completing 7 investment write-ups and cycling through at least one result, I thought it would be a good idea to track progress and keep myself honest. The below details the initial thesis, progress and outlook across each stock.
Mastercard (Buy initiated on 18/06, +14%)
Thesis - preferred exposure to digital payments due to its market share gains, diversification and margin upside.
Tracker - has largely played out to date, recent investor day and Visa anti-trust case adds further conviction. Revenue has exceeded expectations, although my earnings forecasts have remained flat due to a 4% tax rate increase.
Outlook - could probably buy at a better price, can deliver 11% IRR and trades above historical forward P/E multiple at 32x delivering mid-teens EPS growth.
Wise (Buy initiated on 18/06, +26%)
Thesis - leading digital player with counter-positioning and long runway to gain share in cross-border payments. Margins were managed down to reinvest in growth rather than as a response to competition and lack of runway. The negative stock reaction provided a good entry point at £6.90.
Tracker - operating metrics have re-accelerated, margins have remained elevated while Wise has signed partnerships, including Standard Chartered - a large bank and watershed deal. My revenue forecasts have reduced modestly while near-term earnings are higher as Wise takes longer to bring margins down.
Outlook - low-teens IRR
Amazon (Buy initiated on 01/07, +3%)
Thesis - unique opportunity to invest in a dominant leader with both operational and financial momentum. Margins to inflect due to mix-shift towards higher margin segments and cost optimisations.
Tracker - playing out, margins have been higher than expected. With hindsight, could have initiated at a better entry point.
Outlook - mid-teens IRR. Trades on forward P/E of 33x, compounding earnings at 25%. Remains compelling.
Charles Schwab (Buy initiated on 27/08, +25%)
Thesis - cash sorting likely ending, with Schwab able to pay down expensive debt and deliver net interest margins of 3%. This lifts net interest income and uncovers latent earnings potential, with EPS growth >20%.
Tracker - playing out, cash levels are increasing while there is clear focus and momentum. My near-term revenue and earnings forecasts have lifted while FY26 and FY27 has contracted slightly due to a projected lower interest rate environment.
Outlook - mid-teens IRR and trades of 19x forward P/E based on my estimates.
Diploma (Buy initiated on 25/10, -1%)
Thesis - becoming a better business with stronger organic growth, more resilience and sustainable margins. Near-term M&A expected to provide a tailwind and drives EPS growth of 15% over 3 years.
Tracker - result was in-line, near-term divestments, elevated margins from the Peerless acquisition led to my earnings forecasts reducing by 3%. Have also tempered my M&A expectations to account for potential divestments.
Outlook - 13% IRR, 3.8% forward FCF yield with earnings now compounding at 13%.
Synopsys (Hold initiated on 24/06, -8%)
Thesis - preferred semiconductor EDA exposure given leadership qualities, increased focus and strategic Ansys acquisition. Near-term risks around Ansys acquisition and high valuation keeps us on the sidelines.
Tracker - tracking largely in-line, revenue and earnings forecasts have fallen 1-3%. Given Ansys risk (size and regulatory approval) is probably higher than anticipated, I have adjusted my earnings estimates and terminal FCF yield to provide greater margin of safety.
Outlook - 6% IRR, 2% forward FCF yield and compounding earnings at mid-teens.
Atlas Copco (Hold initiated on 23/07, -6%)
Thesis - high-quality business with strong reinvestment capabilities (ROCE of 30%), although they should face margin pressure from mix-shift to dilutive M&A while multiple remains elevated.
Tracker - in-line, consensus revenue and earnings estimates have fallen below my initial forecasts. Continue to see weakness and will await a better entry point.
Outlook - 6% IRR, forward P/E of 28x growing earnings at around 7%.