Investing in Companies that Earn Profits #veeva #iqvia #nvidia #thermofisher #adobe

This video provides an in-depth exploration of how to identify profitable companies for long-term investment, moving beyond mere stock price fluctuations to focus on underlying business fundamentals. The speaker, Jeff Luke, a professional photographer and author of "Stock Market Intelligence," aims to equip investors with tools to analyze a company's financial health. He emphasizes the importance of understanding revenues, operating expenses, and net income to determine true profitability, contrasting this approach with speculative investing in companies that may not yet be generating profits. The core message is that long-term investment success is rooted in becoming a part-owner of a fundamentally sound, profitable business.

The presentation progresses by first setting the stage for a more informed investment strategy, highlighting the distinction between short-term market "voting" (price movements) and long-term "weighing" (business fundamentals). Luke then illustrates his methodology by examining five specific companies, all of which he personally holds stock in, providing their trailing 12-month (TTM) revenues, operating income, and net income. He explicitly mentions his preference for investing in industries he understands well, particularly the life sciences, which informs his selection of companies like Veeva Systems, Iqvia, and Thermo Fisher Scientific. This approach underscores the value of industry knowledge in making confident, long-term investment decisions.

The video details the financial performance and market positioning of each selected company. Veeva Systems is highlighted as a leading provider of cloud-based software for the life sciences industry, known for its profitability. Iqvia is presented as a dominant contract research organization (CRO) and a key player in life sciences data and analytics. Nvidia's role as a top designer of GPUs, crucial for enhancing visual computing and powering technologies like autonomous vehicles, is discussed. Thermo Fisher Scientific is identified as the premier life sciences supplier, offering a vast portfolio of devices and machinery for scientific analysis. Finally, Adobe Systems is recognized for its dominance in content creation software through its Creative Cloud subscription model. For each, specific financial figures are provided, reinforcing the video's focus on tangible profitability metrics.

Ultimately, the video advocates for a disciplined, fundamental-driven investment strategy. Luke encourages viewers to always ascertain a company's profitability before investing, fostering a category of investor who makes decisions based on clear financial understanding rather than chasing "hot stocks." He stresses that investing in well-run, profitable businesses provides confidence, reduces the need for constant market monitoring, and aligns with a long-term holding strategy, allowing investors to "buy it and then just put it away."

Key Takeaways:

• Prioritize Profitability in Investing: Investors should always determine if a company is earning profits or suffering losses before making an investment, moving beyond mere stock price movements to understand the underlying business health.
• Understand Core Financial Metrics: Key indicators of a company's financial health include revenues (money taken in), operating income (money left after operating expenses), and net income (final profit after all costs). These are crucial for assessing true profitability.
• Access Financial Data: Basic financial statement information, including income statements, can be found on a company's website (annual/quarterly reports) or through financial services like Value Line and Morningstar.
• Veeva Systems' Market Position: Veeva is a profitable, leading provider of cloud-based software solutions specifically for the life sciences industry, making it a significant player in a specialized and regulated sector.
• Iqvia's Dominance in Life Sciences: Iqvia is a profitable and dominant contract research organization (CRO) and a key player in life sciences data and analytics, serving a critical role in drug development and healthcare insights.
• Nvidia's GPU Leadership: Nvidia is the top designer of Graphics Processing Units (GPUs), which are essential for enhancing visual computing platforms and are increasingly vital for AI applications, including autonomous vehicles.
• Thermo Fisher Scientific as a Life Sciences Giant: Thermo Fisher Scientific is described as the premier life sciences supplier, providing a wide array of devices, machinery, and services used for analysis and research within the life sciences industry.
• Adobe's Content Creation Monopoly: Adobe Systems dominates the content creation software market with iconic products like Photoshop and Illustrator, operating on a successful subscription model (Creative Cloud).
• Speaker's Investment Philosophy: The speaker, Jeff Luke, emphasizes investing in industries one understands well (e.g., life sciences) to better grasp a company's relative strength and dominance, leading to more confident, long-term investment decisions.
• Long-Term vs. Short-Term Investing: The video distinguishes between short-term market "voting" (speculation based on price) and long-term "weighing" (investment based on business fundamentals and profitability), advocating for the latter.
• Confidence in Well-Run Companies: Investing in consistently profitable and well-run companies provides confidence, reducing the need for frequent trading decisions and allowing for a "buy it and put it away" long-term strategy.
• Avoid Speculation Without Awareness: While speculating on unprofitable companies is an option, investors should be fully aware of the inherent risks and understand that such ventures are not based on current profitability.

Tools/Resources Mentioned:

• Company annual reports
• Company quarterly reports
• Value Line (financial research service)
• Morningstar (financial research service)
• "Stock Market Intelligence" (book by Jeff Luke)
• "Crush It With ETFs" (book by Jeff Luke)
• "The ETF Investor" (book by Jeff Luke)
• Sony ZV-1 (camera used for filming)
• Joby TelePod Mobile Tripod (tripod used for filming)

Key Concepts:

• Revenues: The total amount of money a company generates from its sales of goods or services before any expenses are deducted.
• Operating Income: A company's profit after subtracting operating expenses (such as wages, depreciation, and cost of goods sold) from revenues, but before deducting interest and taxes.
• Net Income: The total profit of a company after all expenses, including operating costs, interest, and taxes, have been deducted from revenues. Often referred to as "the bottom line."
• Trailing 12 Months (TTM): A financial metric that represents the sum of a company's financial performance over the past 12 consecutive months, providing a more current view than annual reports.
• Contract Research Organization (CRO): An organization that provides support to the pharmaceutical, biotechnology, and medical device industries in the form of research services outsourced on a contract basis.
• Graphics Processing Unit (GPU): A specialized electronic circuit designed to rapidly manipulate and alter memory to accelerate the creation of images in a frame buffer intended for output to a display device. GPUs are crucial for AI and machine learning.
• Creative Cloud: Adobe's subscription service that provides users with access to a collection of software developed by Adobe for graphic design, video editing, web development, photography, and more.
• "Voting" vs. "Weighing": An investment analogy where "voting" refers to the short-term market sentiment and price fluctuations (how the market "votes" on a stock), while "weighing" refers to the long-term assessment of a company's intrinsic value based on its fundamentals (how the market "weighs" the business over time).