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SUMMARY
Jeremy Lefebvre discusses the recent performance of several stocks in his portfolio, including ELF, Oracle, Adobe, and RH, providing detailed analysis and future projections. The video covers market trends, company fundamentals, and strategic investment approaches amid changing economic conditions.
MAIN POINTS
- ELF's stock performance and recent gains are reviewed, highlighting significant appreciation in both public and private portfolios.
- ELF's brand strength and expansion into new product categories, such as hair care, are discussed, emphasizing its retail partnerships and growth potential.
- Revenue projections for ELF through 2030 are compared, with both conservative and optimistic scenarios outlined by group members and Jeremy.
- Oracle's latest earnings are analyzed, noting strong revenue and operating income growth but highlighting significant concerns over rising interest expenses and debt.
- Adobe's financials are evaluated, with solid revenue growth but increasing costs and persistent concerns about long-term disruption impacting its valuation.
- RH's mixed earnings report is detailed, including modest revenue growth, high SG&A expenses, and the impact of tariff benefits on profitability.
- Jeremy outlines his strategy to build a position in RH while the real estate market is weak, aiming for long-term gains as the company focuses on cash accumulation and reduced capital expenditures.
DETAILED ANALYSIS
The analysis begins with a review of recent market volatility, where Jeremy Lefebvre notes that while some stocks in his portfolio experienced declines, others, particularly in the small-cap segment, performed well. He highlights ELF as a standout, detailing its journey from $49 to over $100 per share within a few months before settling at $95. Jeremy provides a breakdown of his holdings in ELF, revealing substantial gains across both public and private portfolios, with positions established at various price points since 2019.
The core of ELF's success, according to Jeremy, lies in its brand strength and ability to expand into new categories. He recounts a visit to Target, where ELF's new hair care line was prominently displayed, underscoring the company's appeal to major retailers and its capacity to generate excitement with new product launches. This adaptability is rare in the beauty sector, where few brands can successfully enter new categories and achieve immediate traction.
Jeremy further explains that ELF's growth is not limited to its namesake brand. The company also owns Road, described as the hottest brand in beauty, and Notorium, which is rapidly expanding in the body wash segment. Road's exclusivity and limited retail presence contribute to its desirability, while Notorium aims for broad distribution.
These brands provide multiple avenues for revenue and margin expansion, with Jeremy emphasizing the youth of these brands and the significant margin improvement potential as they scale. He compares ELF's current $5 billion market cap to industry giants like L'Oreal and projects that ELF could eventually reach multiple tens of billions in valuation, though he tempers expectations about surpassing the largest players.
Jeremy shares both his and a group member's projections for ELF through 2030. He considers a 4% base case revenue growth for ELF's core U.S. business to be overly conservative, expecting higher growth due to expanded distribution, pricing power, and new product launches. His own base case forecasts $3.3 billion in revenue and nearly $500 million in net income by 2030, with net income margins rising to 15%.
Under a bullish scenario, he projects nearly $4 billion in revenue and $647 million in net income, with margins at 17%. These projections translate to a potential stock price of $250–$300 in the base case and over $400 in the bull case by 2030, representing significant upside from current levels.
The discussion then shifts to Oracle, whose recent earnings report is characterized by strong revenue and operating income growth but marred by escalating interest expenses and a growing debt burden. Oracle's operating expenses increased at a slower rate than revenue, boosting profitability, but the company faces a major challenge with interest expenses consuming 8% of revenues. Jeremy notes that while Oracle's income statement is robust, its balance sheet issues make it a risky investment despite its large market cap.
He suggests that Oracle may be a viable investment at a discount but advises caution due to the potential for worsening debt-related problems.
Adobe is next, with Jeremy assigning it a B-grade for its latest quarter. Revenue grew 13%, but costs outpaced revenue growth, leading to only modest increases in operating and net income. Adobe's aggressive share buybacks helped boost EPS, but Jeremy expresses concern about the stock's valuation.
He argues that Adobe is unlikely to regain its former premium multiples due to persistent fears of disruption from AI and alternative creative tools. This skepticism about Adobe's ability to command higher valuations leads Jeremy to conclude that the stock is unlikely to deliver substantial returns unless it achieves exceptional revenue growth or can convincingly dispel disruption concerns.
Finally, Jeremy examines RH, a company he recently began accumulating. RH's latest earnings were mixed, with modest revenue growth and high SG&A expenses, partially offset by tariff benefits. The company is navigating a challenging real estate market, and Jeremy notes that RH's capital expenditures are set to decrease, which he views positively for future net income.
RH is also building cash reserves, which Jeremy wants to see reach at least $250 million before focusing on debt reduction. He outlines a strategy of scaling into RH while the market is weak and mortgage rates are high, believing that the best opportunities in cyclical stocks arise during downturns. Jeremy expects that RH's investments in flagship galleries and new concepts will position it well for future growth, but he stresses the importance of disciplined spending and balance sheet management through 2030.
He concludes by encouraging viewers interested in advanced investing strategies to join his private group for further insights and community support.
LINKS
- Application page for Jeremy Lefebvre's private stock and wealth group.
- Patreon page for supporting the channel and accessing weekly stock buys.
- Free workshops for various investing topics.
- Jeremy Lefebvre's official Instagram profile.
- Jeremy Lefebvre's X (Twitter) profile.
- Jeremy Lefebvre's Facebook profile.
- Jeremy Lefebvre's personal website.
- 1000XStocks Instagram account.
- 1000XStocks X (Twitter) account.