Stock Analysis Report
- nora1976
- 2025年9月9日
- 讀畢需時 14 分鐘
Part I: Strategy overview
1. Global Economic Situation Overview
Due to the constantly changing and cyclical nature of the global economy, the current era is experiencing
relatively slow economic growth. According to OECD, there will be a prolonged period of worldwide
economic recovery. The report Going For Growth indicates that global GDP growth prospects for 2023 and
2024 are not very promising, and the outlook for medium-term growth remains weak. It is expected that in
2024, certain countries will implement supply-side reforms to boost their potential for economic growth.
Therefore, it is advisable to focus on labor-intensive industries and technology-intensive industries.
Additionally, ascribing to efforts made by organizations all over the world, environmental protection is
becoming more sophisticated in process and there is ascending trend of reducing carbon foot point. Therefore,
ESG has become an increasingly significant indicator of a company's potential. It is believed that a company
with approachable strategy of ESG enriches its original value of investment.
Furthermore, artificial intelligence has garnered tons of attention. Despite minority of people states it will
replace human labor, we believe that AI has a great position to promote individual's capacity of production,
especially in information industry which would be likely to undergo a radical growth.
2. Investment Strategy
Our team'sinvestmentstrategy involves hedging with advantageousstocksin thriving industries, accompanied
by event-driven focus and concentrating on quality targets such as Nvidia and AMD. Therefore, we prioritize
the financial events of the company and conduct thorough product analysis to avoid blind operations.
Furthermore, we adhere to principles of profitability and liquidity to ensure steady performance, while using
Porter's five force model to identify dominant factors and potential threats for our portfolio. Additionally, we
emphasize the uniqueness of management and structure. Overall, through routine portfolio maintenance and
risk management considerations, we aim for reasonable targets within the valuation range.
3. Team Portfolio Performance
These stocks are generally steady and profit-maintainable. NVIDIA gives a 6.76% rise, which is in our
consideration, and we predict NVIDIA will rise up again after the split (10/6). Although stocks we chose all
show a slight increase in stock value, we predict their prices will rise in a longer period, as the unstable price
of US treasury price.
Part II: Company analysis
1. Company Overview
NVIDIA:
NVIDIA is a leading technology company specializing in graphics processing units (GPUs), which are
increasingly outperforming CPUs in 3D graphics and AI algorithm development. Their dominance in the chip
market is evident in their 90% market share of next-generation chips, solidified by a recent order from
Amazon. NVIDIA's CUDA platform, a powerful tool for harnessing the power of AI, provides developers
with a universal toolkit and platform, further enhancing their consumer appeal.
APTIV:
Aptiv PLC is a prominent supplier of vehicle components to original equipment manufacturers worldwide,
specializing in solutions for car production such as connector wires and safety restraint systems for both
automobiles and commercial vehicles. With the increasing global demand for cars, particularly the focus on
connectivity and safety features, Aptiv is well-positioned to benefit from this trend. The recent acquisitions of
Höhle in 2023 and Wind River in 2022 have further strengthened Aptiv's position in the automotive software
solutions market.
BANK OF AMERICA:
Bank of America Corporation operates as a financial holding company. The Company offers saving accounts,
deposits, mortgage and construction loans, cash and wealth management, certificates of deposit, investment
funds, credit and debit cards, insurance, mobile, and online banking services. Bank of America serves
customers worldwide. With total assets amounting to over $3 trillion as of March 31, 2024, BAC reflect a
solid performance in a competitive landscape by ensuring its Robust Financial Position. BAC also continues
to lead in digital banking innovation, with approximately 47 million active digital banking users, including
39 million active mobile users
2. ESG Situation
APTV:
With an AA ESG rating, APTV is a leader among 139 companies in the auto components industry. We can
expect a stable ESG rating in the future, since the company has maintained an AA rating for the previous five
years. In addition, APTV has a target for decarbonization, projecting reduction per year to meet stated target
-6.68% p.a. Moreover, according to MSCI ESG Ratings, the company is not involved in major controversies,
indicating that APTV experiences less turbulence.
NVDA:
With an AAA ESG rating, Nvidia is a leader among 285 companies in the semiconductors & semiconductor
equipment industry. It is predicted that Nvidia will keep its ESG at AAA, since the ESG rating has maintained
at AAA level for the previous 5 years. Nvidia gets sustainable investments since it does not involve in industry actions nor a laggard on any of the key issues. In addition, the company stands out on their high selectivity for workers. Furthermore, Nvidia is concentrating on environmental-friendly tech-innovation.
BAC:
Bank of America, a prominent figure in the banking sector, maintains an average ESG rating that places it
ahead of 635 of its competitors. Despite facing some minor controversies regarding social and governance
risk management, the company has shown a strong commitment to sustainability. Bank of America has
established a clear goal for reducing carbon emissions and aims to achieve net-zero emissions by 2050. In
order to reach this target, they have outlined plans to decrease carbon emissions by 3.45% annually. The
company's impressive track record includes providing assistance to those in need, supporting green and ESG
themed bonds, and investing in ESG-focused strategies as indicated by MSCI ESG Ratings and performance
data from 2022.
3. Industry Analysis
Global Business cycle:
Many major economies, including the United States, are currently in the late-cycle expansion phase, providing
signals of re-acceleration.
The U.S. economy is off to a weak start in 2024, with inflation and rising interest rates weighing on the
economy. While a recession is not expected in 2024, consumer spending growth is expected to cool further.
Technology Industry:
The sector is up 34 percent over the past year. Earnings are expected to grow by 17% annually over the next
few years. The sector now trades at 43.4 times earnings, and the profit is higher than the past three years,
which indicates a swift industry progress.
People is now optimistic towards the development of tech-sector, because of the adoption of generative AI,
migration to the cloud and focus on innovation and growth.
Automotive industry:
Automakers have been flat over the past seven days, and the industry is down 14 percent over the last year.
Earnings are expected to grow by 12% annually over the next few years.
Financing industry
The sector has upped 29 percent in the past 12 months. Annual earnings are expected to rise 8.5 percent.
Investors are optimistic about U.S. banks and confident about long-term growth rates.
The sector now trades at 13.2 times earnings, above the three-year average of 10.3 times, indicating a relatively
good banking environment.
Due to slow revenue growth and high operating expenses, the banking industry in 2024 has to consider the
diversification of business, for example, more types of financial capital goods provided. Also, it must invest
in new frame of offsetting the adverse business events and adapting to the changes in other related industries,
like real estate industry.
4. Revenue Driver
NVIDIA's success stems from their dominance in the data center GPU market which is driven by the surge in
demand for AI capabilities like ChatGPT. Their strong position in the gaming market, where they are the
world's largest supplier of gaming graphics cards, further bolsters their revenue.
Aptiv, a leader in advanced mobility solutions, focuses on providing "brain and nervous system" technology
for vehicles, particularly electric and hybrid models. Their driver-assistance systems (ADAS) technology,
which enables OEMs to build safer and more intelligent vehicles, is a key revenue driver.
Bank of America has diversified financial services model such as retail banking, financial solutions for clients,
and cash management services. The profit margin between lending and borrowing rates is a key driver of their
profitability. Their private wealth services cater to high-net-worth individuals, contributing to their high
growth income streams
5. Porter’s Five forces Model analysis
NVIDIA:
Aptiv:
BAC:
6. Financial Analysis
Nvidia：
The operation overview and estimation:
Revenue for the full year of fiscal 2023 was approximately $26.97 billion, and the expected revenue of fiscal
2024 is $24.0 billion. Comparing to the current 64.11 PE ratio and stock price, it might seem to be
overestimated. Due to the beta, investors may regard it as volatile with the variation of whole economy.
Profitability:
However, the expected annual revenue growth of 22.79% along with revenue growth of 790.5 percent in the
past year proves its promising future of value. Also, the PEG ratio of Nvidia is 1.40, which suggests that the
price of NVDA is acceptable in a certain range within consideration of the leading position of 90% market
share in the chip market. The Earnings per share of $17.33 shows a strong shareholder return ability along
with a high ROE of 77.3% per year and the whole industry of 14.8% in expected three years.
Liquidity:
The risk control of Nvidia is also outstanding, denoting by a debt/equity ratio of 19.8%, showing that the
capital Nvidia owned is stable enough to repay its debts. Additionally, the cash flow is increasing from $6.1
billion in 2022 to $27 billion in 2024, which also verifies the efficiency and liquidity of the firm.
Summary:
Although the price is slightly pushed up by demand, Nvidia is still a superb stock with promising returns with
its influence on the tech-industry.
Aptiv
Estimate and Profitability:
Aptiv is undervalued recently with current price $83.26 lower than calculated fair price ($116.68), which
suggest it is a valued stock in the long run. Also, it has a moderate PE ratio of 7.6, far below the industry
average of 15.8 and its own forecast of 16.1, indicating low volatility of its value and high potential of growth.
Liquidity and warning factors:
It is worth noting that the earnings growth rate and EPS growth rate are both negative (- 14.2% and - 8.0%),
showing the increasing running cost of the firm.
Also, the asset-liability ratio is constantly maintaining at a high level of approximately 50%, showing a
relatively large leverage of company operation.
Moreover, the forecast ROE of 15.9% is not favorable for an instant thriving company and the high cost of
elimination($51.00m).
Summary:
Overall, the investment proposal is to avoid investing in Aptiv in the short run due to its low return and
uncertainty, the market rationally reflect the value of Aptiv now.
Bank of America:
Estimate:
Firstly, BAC is undervalued since its current price $39.99 is lower than its fair price($45.70), although this
estimate may be not precise for banking due to banking system, it gives us a calibration of a good potential of
BAC.
Growth and profitability:
Also, its earnings growth rate and EPS growth rate are 6.3% and 8.1％ respectively, providing indicator of
continual growth. Furthermore, BAC has a 2.4% Dividend yield and a 32% Dividend payout ratio, verifying
a stable dividend stock.
Liquidity, Efficiency, Risk:
Two of important indicators for a bank are net interest margin and non-performing loan ratio, and BAC
generally did well with data 2.1% and 0.6% respectively, substantiating its well-functioning structure with
low risk and high profitability.
However, something worth noting is that its Net non-interest income is negative, which is calculated by non
interest income less non-interest expense. ($41,650-$65,845) This data reflects the businesses except loans
with interests are defective (for example, the bonds the bank bought in previous 5 years are depreciated and
the commissions for mutual fund managers are still high, this will cause the negative value), suggesting that
Bank of America is highly related to the policy of Fed and Government and is dependent on traditional loaning
businesses, which is an obvious disadvantage of investing, especially under the circumstance of rising prices
in USA.
Summary:
Our proposal is that BAC is a great stock for diversifying risks in the short run when the high interest rate is
attractive to consumers, it will provide you with stable return monthly.
7. Management and Governance
Nvidia:
Nvidia, led by CEO Jen-Hsun Huang, has a highly skilled management team with an average tenure of 15.4
years. Huang's 31-year leadership demonstrates a deep understanding of the business and a forward-thinking approach. Nvidia's culture encourages innovation and productivity through a collaborative atmosphere that values everyone's potential. Recent shareholder activity, including many selling shares for profit, indicates strong returns on investment for stockholders.
Aptiv:
Aptiv, under the leadership of CEO Kevin Clark since 2015, has a relatively brief CEO tenure (9.25 years),
which may indicate potential for a change in leadership and some uncertainty about the company's future
direction. The average tenure of 1.5 years for the management team suggests a younger, less experienced
leadership structure. While Clark's compensation is in line with the company's recent performance, indicating
a balanced approach to management development, Aptiv needs to create a more diverse and inclusive
environment for its employees to complement its focus on teamwork and collaboration.
BAC
The culture of BAC is doing things responsibly, avoiding unnecessary information, providing diversity and
inclusion. This manifests a healthy management culture. Bank of America CEO Brian Moynihan, who took
over in January 2010, has been in office for 14.42 years, and his total annual compensation was $28.57 million.
Brian's compensation is in line with the company's performance over the past year, suggesting a balanced
progress of management. Next, BAC's management team is considered experienced (average tenure is 4.1
years) and the shareholders gains a high amount of dividend each year comparing to other companies.
8. Valuation
Nvidia:
Because of its dramatic annual growth rate in high-tech industry, Nvidia does not highly adapt to the DCF
model. Using the DCF model, a reasonable P/E range for NVIDIA would be 44 times, and the appropriate
price range of its stock is 640-800 dollars.
Average multiple is (166.17/2.65+211.90/2.44+14100/36.01)/3=180.4
Value of NVDA=180.4*11.93 = $2151.8
Similar market cap
Average multiple is (195.87/6.46+424.01/11.59)/2=33.5
Value of NVDA= 33.5*11.93=$399.1
By weighing the two results, the final range of value weighing we gained within the time period of 2024-2025
is $127.5-$145/share.
Aptiv:
DCF:
Sustainable growth rate calculated is 2.178% and WACC is 7.99%. FCF 2024 is at 1154736550. FCF for
2025 and 2026 are calculated by annual growth of 8% in three years. Also, total share on the market is
275190000.
Value per share =EV-net debt/ total share on market=$71.1
Relative valuation:
AM=50.45, so we have P=50.45*0.79=$39.9
However, when considering the big market cap of Aptiv than any individual stock,
the ultimate price we give is in given 2-3Q, the price of Aptiv will maintain at $79.7 plus or minus $5.
BAC:
The Value per share of BAC using WACC of 7.97%27 , FCF 2024 is 4.0743*10 at exponent of 9. In great
banking environment, the price is $49.42 in 1yr period.
Relative Valuation:
AM=13.73, so we have P(BAC)=2.90*AM= $39.8
Our target price for BAC is $ 44.6(if no big change in the policy operated by Fed)
9. Investment Risk
Risk situations
（IRR value of NVDA and BAC are calculated by us)
* The ROIC and IRR of NVDA and APTV are both larger than their WACC, which indicates a good return of
cost, whilst BAC is a bank with IRR bigger than WACC but ROIC smaller than WACC,suggesting the stability
of BAC but a relatively low developing potential.
NVDA:
Owning to its ability dominating the AI chips market, Nvidia attracts large orders from Meta, Google, Amazon
and so on. Although the revenue is keeping up the momentum of the flood since 2024, there are some
undermined factors need to be considered.
Firstly, the external competition seems to be getting stronger due to new forces from chips’ new usage on
mobile devices of Apple and Qualcomm and shifts from training AI model into AI large-scale model in the
future led by Cerebras Systems. More seriously, the biggest consumers of Nvidia like Google are also trying
to break through bottleneck of Nvidia chips by developing their own chips.
Secondly, Nvidia faces challenges, with 30 percent of the data center market share potentially compromised
by chips and the shrink in game chip market, which can be a market transition problem.
Lastly, with Jensen Huang announced the future plan for Rubin Platform, the fund of Nvidia may be in an
inferior situation until the Rubin gives them strong power to compete with others in the future. Consequently,
Nvidia is in the high expectation needing more consolidated advantages.
APTV:
With the high development of car industry, APTV has great revenues in the past three years. Nonetheless,
there are some elements making the price to be lower than expectation.
With a declining growth rate in return, the Aptiv is now in the dilemma of seeking ways to transform due to
the industrial pressure from other companies like Denso and even Tesla.
Moreover, with the thriving hardware car part production in China, the Aptiv may lose the China market due
its line of business. Lastly, Aptiv is intensely concerned by retail investors and medias, with most search times
in Zacks.com, and this may be a signal of uncertainty in the short-run investment.
BAC:
Within the banking industry, the BAC seemed to be the most stable stock in the portfolio, however, some
potential warnings should be indicated.
The first to be affected is the indeterminacy of the Fed decisions. Under the unstable global economic situation
due to wars and other factors, the uncertainty of whether Fed will decrease the interest rate will highly
undermine the anticipation of investors for BAC and influence the performance of BAC itself due to low net
interest income, especially for BAC which owns a negative number in Net non-interest income. This shows
that BAC lacks other modes of making profit without the loans, this may make it vulnerable in economic
fluctuations. Also, BAC may also be influenced by the sensitive change of aggregate demand of people due
to the gradual change in borrowing costs of Mortgage released by Philip N. Jefferson (20/5/2024), causing
low demand for loans, creating bigger negative impact from systematic risks than other firms.
10.Conclusion
Nvidia:
Proposal: Buy/ Hold
The best buying price is lower than $120/share, NVIDIA holds a dominant position in the GPU market and
possesses significant competitive strengths. Its commitment to innovation and customer satisfaction makes it
an attractive investment option within the semiconductor industry. Nevertheless, investors should remain vigilant of potential challenges posed by rapid prototyping technologies.
Aptiv:
Proposal:Hold/Buy
Aptiv is a relative long-run profitable stock, because it is active in the automotive supply sector, which
experiences moderate levels of competition. Aptiv's emphasis on innovation and limited alternatives are
favorable aspects, but it is important for investors to monitor changes in the power dynamics between
suppliers and buyers such as disruptions of other Tech-giants.
BAC:
Proposal: Hold
BAC is a stable stock, indicating a loss-limited investment. Bank of America faces tough competition from
its rivals, but it maintains a strong position thanks to its robust capital and well-established brand. However,
investors should keep an eye on the overall economic climate, as the banking industry is closely linked to
the broader economy.
11.Reference
“Amazon orders NVIDIA chips ”https://finance.yahoo.com/news/data-amazon-orders-nvidia-chips-091710732.html
NVIDIA CUDA Zone. (n.d.). NVIDIA Developer. https://developer.nvidia.com/cuda-zone
“Here is why hold aptiv ”https://hk.finance.yahoo.com/news/heres-why-hold-aptiv-aptv-151000415.html
Bloomberg (n.d.). June 14, 2024, https://www.bloomberg.com/profile/company/BAC:US
https://www.bloomberg.com/profile/company/BAC:US Decoding Bank of America Corp (BAC): A Strategic SWOT Insight, June
ESG ratings. (n.d.). MSCI. https://www.msci.com/zh/esg-ratings/issuer/aptiv-plc/IID000000002629485
ESG ratings. (n.d.-c). MSCI. https://www.msci.com/zh/esg-ratings/issuer/nvidia-corporation/IID000000002176634
World Leader in AI Computing, June 14, 2024, https://www.nvidia.com/en-us/
Simply Wall Street Pty Ltd. (2021, July 1). U.S. tech sector analysis. Simply Wall St. https://simplywall.st/markets/us/tech
Simply Wall Street Pty Ltd. (2021a, June 30). U.S. automobile manufacturers industry analysis. Simply Wall St.
Simply Wall Street Pty Ltd. (2021b, July 1). U.S. banks industry analysis. Simply Wall St.
GeForce Graphics Cards - Ultimate PC Gaming. (n.d.). NVIDIA. https://www.nvidia.com/en-us/geforce/
Topic: Bosch. (2024, January 10). Statista. https://www.statista.com/topics/1519/bosch/#topicOverview
The complete toolbox for investors | Finbox.com. (n.d.). https://finbox.com/NYSE:APTV/explorer/rd_exp/
Bank of America Merrill Lynch is Now Bank of America & BofA Securities. (n.d.). Bank of America.
Wealth Management Services & Wealth Planning from Bank of America. (n.d.). Merrill Lynch.
What barriers to entry exist in the financial services sector? | PaymentGenes. (n.d.). https://www.paymentgenes.com/blog/what
barriers-to-entry-exist-in-the-financial-services-sector
Nvidia (NVDA) Stock Price, News, Quotes and Past Records. https://hk.finance.yahoo.com/quote/NVDA/
Simply Wall Street Pty Ltd. (n.d.). NVIDIA (NasdaqGS:NVDA) Stock Forecast & Analyst Predictions - Simply Wall St. Simply
Simply Wall Street Pty Ltd. (2024, June 12). APTIV (NYSE:APTV) - Stock price, news & analysis - Simply Wall St. Simply
Simply Wall Street Pty Ltd. (2024c, June 12). Bank of America (NYSE:BAC) - Stock price, news & analysis - Simply Wall St.
Simply Wall St. https://simplywall.st/stocks/us/banks/nyse-bac/bank-of-america
Annual reports & proxy statements. (n.d.). Bank of America Corporation. https://investor.bankofamerica.com/annual-reports-and
proxy-statements
nvidia Company Culture | Comparably, https://www.comparably.com/companies/nvidia
Bank of America Corporation Insider Trading & Ownership Structure - Simply Wall St. Simply Wall St.
Aptiv PLC (NYSE:APTV). (n.d.-b). AlphaSpread.com. https://www.alphaspread.com/security/nyse/aptv/summary
Yahoo Finance - Stock Market Live, Quotes, Business & Finance News. https://finance.yahoo.com/
NVDA (NVIDIA) WACC %. June 14, 2024, https://www.gurufocus.com/term/wacc/NVDA
Nvidia Unveils Next-Generation Rubin AI Platform for 2026. https://finance.yahoo.com/news/nvidia-touts-products-aimed
expanding-121033569.html
Leswing, K. (2024, June 2). Nvidia dominates the AI chip market, but there’s more competition than ever. CNBC.
Investors Heavily Search Aptiv PLC (APTV): Here is What You Need to Know. https://finance.yahoo.com/news/investors
heavily-search-aptiv-plc-130011187.html
Just next week, the ECB takes the lead in the rate-cutting cycle. https://wallstreetcn.com/articles/3716298
Speech by Vice Chair Jefferson on the U.S. economic outlook and housing price dynamics.
留言