In his YouTube episode, Joseph Carlson takes us through the recent sell-off in top-tier stocks and provides an in-depth valuation of each one. Using his Qualum Discounted Cash Flow Calculator, Carlson evaluates the future prospects of tech giants, financial services, and consumer businesses.
Carlson, who has over a decade of experience in dividend-growth investing, manages a six-figure passive income portfolio. His detailed analysis blends qualitative assessments with rigorous quantitative modeling to provide insights into where he sees value in today’s volatile market.
The Current Market Sell-Off
Carlson opens by noting the major sell-offs across industries:
- S&P Global: -3.9%
- Netflix: -5% (today), -10% (yesterday), fell below $900 after topping $1,000 recently.
- Spotify: Rapid liquidation.
- Palantir: Dropped from $100 to $80 in one month.
- Costco: Down almost -7% post-earnings, unusual for the stock.
These declines have led Carlson to re-evaluate valuations and uncover potential buying opportunities.
How He Values Stocks
Carlson’s Qualum Discounted Cash Flow Calculator uses these variables:
- Earnings per Share (EPS) Growth Rate
- Price-to-Earnings Ratio (P/E)
- Free Cash Flow (FCF) Yield
- Discount Rate (Desired Return)
He aims for a 15% annual return, allowing his portfolio to double every five years.
Joseph Carlson’s Stock Rankings (Detailed)
✅ Undervalued Stocks
🔹 $GOOGL (Google)
Carlson highlights Google’s consistent and impressive earnings growth—33% over the past 2 years, 26% over the past 5 years, and 22% over the past decade. Despite this, the stock trades at a low PE ratio (21 forward PE). Even with conservative estimates of 10-15% earnings growth, Carlson projects 15-21% annualized returns over the next 5 years. He believes the market is undervaluing Google’s future growth potential.
🔹 $AMZN (Amazon)
Joseph calls Amazon “indestructible,” emphasizing its diversification across AWS, advertising, e-commerce, and logistics. Earnings per share have grown 37% over 5 years and 90% in the past year. Carlson expects 20-25% annual growth and sees the stock delivering 20%+ annual returns. He believes tariff fears have unjustly driven the stock price down, making it a compelling buy.
🔹 $SPGI (S&P Global)
Carlson’s largest portfolio holding. He forecasts 14% free cash flow per share growth and sees a 17% potential return with a reasonable 3.2% free cash flow yield. Even in conservative scenarios, he expects a 15% return. Carlson states S&P Global’s wide moat and stable business model justify its placement in the undervalued category.
🔹 $ASML (ASML Holdings)
Carlson recently increased his position in ASML. He projects 20% free cash flow growth over the next 5 years. At current depressed prices, he sees a 17-21% return, with a potential price target of $1,640 – $1,920 per share by 2030. He notes the company’s technology dominance and geopolitical importance strengthen its moat.
🔹 $CRM (Salesforce)
Despite recent underwhelming earnings, Carlson believes Salesforce is undervalued. It trades at a 25 forward PE and offers a 4.6% free cash flow yield. He assumes 10-12% growth and projects 15%+ returns with modest expectations. Carlson views Salesforce as an attractive opportunity at current prices.
🔹 $UBER (Uber Technologies)
Carlson is bullish on Uber’s scalability and operating leverage. He projects 20% free cash flow growth and sees a 29% return at a 3% free cash flow yield. Even with more conservative assumptions (10% growth and a 4% yield), Carlson expects a 12% return. He acknowledges risks but believes Uber’s transition to profitability is being underappreciated by the market.
🔹 $BKNG (Booking Holdings)
A favorite for Carlson. He sees 15-16% free cash flow growth and 15.6% annual returns. Booking Holdings’ asset-light model, strong free cash flow, and share buybacks make it highly attractive. Even with slower growth or higher yields, Carlson expects solid market-beating returns.
⚖️ Fair Valued Stocks
🔸 $FICO (Fair Isaac Corp)
Carlson notes FICO’s monopolistic pricing power and rapid growth (26% over 5 years). But at current prices, he sees only a 5% return unless growth remains extremely high. He’s waiting for the stock to drop to around $1,100 before buying.
🔸 $TXRH (Texas Roadhouse)
Carlson’s third-largest holding by gains. Despite 43% earnings growth last year, he expects future growth to slow to 11-15%. Based on these assumptions, he projects 4-11% returns. It’s fairly valued, but not a compelling buy today.
🔸 $MCO (Moody’s)
Similar to S&P Global but less diversified and slightly pricier. Carlson forecasts 10-12% returns unless it trades lower. He’s waiting for a drop to $381 to upgrade it to undervalued status.
🔸 $MSFT (Microsoft)
Carlson sees Microsoft as a high-quality business, trading at a fair 28 forward PE. He expects 13-15% earnings growth and 13.5% annual returns. It’s not a bargain, but fairly priced for its consistent, diversified growth.
🔸 $MA (Mastercard)
Mastercard has delivered 19% annual free cash flow growth over the past decade. Carlson assumes 15% growth and sees an 11% return at a 3.4% yield. Solid, but not cheap enough to offer outsized returns today.
🔸 $INTU (Intuit)
Strong recent earnings, AI adoption, and dominant software products. Carlson expects 15% growth but sees only 11% returns unless the stock drops to $500. Fairly valued, but on his watchlist for a better entry point.
🔸 $NFLX (Netflix)
Recently sold off from $1,000 to below $900 per share. Carlson expects 18-21% free cash flow growth. He projects 12-16% returns, but with current pricing, he puts it in the fair value category. Below $760, he would consider it undervalued.
🚨 Overvalued Stocks
🔻 $COST (Costco Wholesale)
Carlson praises Costco’s unmatched business model, but it trades at a lofty multiple. He assumes 10-14% earnings growth, but the stock requires a PE over 45 to justify decent returns. He estimates 4-9% annual returns and calls it overvalued but isn’t selling… yet.
🔻 $PLTR (Palantir)
Despite rapid free cash flow growth (138% over 2 years), Palantir trades at an extremely high valuation. Carlson assumes 30% growth and a 2% free cash flow yield but only sees 2.5% returns. He calls it heavily reliant on maintaining its premium valuation and categorizes it as overvalued.
❌ Selling / Reduced Positions
❗ $AAPL (Apple)
Carlson has trimmed his Apple position by 90%. He cites slowing earnings growth (3.42% over 2 years) and a high PE (29 forward). Even with 12% growth and a 35 PE, he only projects a 10% return. Carlson calls Apple overvalued and is near a full exit.
❗ $VICI (VICI Properties)
A real estate REIT he’s reducing. Despite solid performance and dividends, Carlson believes better opportunities exist. He’s trimmed $3,000 from his $9,000 stake and doesn’t see much upside at current prices.
Quick Recap: Carlson’s Rankings
✅ Undervalued
| Stock | Reason |
|---|---|
| Google (GOOGL) | Strong growth, undervalued under conservative assumptions. |
| Amazon (AMZN) | Significant upside with AWS, Ads, and Prime; Capex returning high ROIC. |
| ASML (ASML) | Dip buying opportunity; geopolitical insulation plays to its favor. |
| Salesforce (CRM) | 15% expected returns despite weak quarter. |
| Uber (UBER) | Scaling successfully; operating leverage unlocked. |
| S&P Global (SPGI) | Largest holding; predictable free cash flow growth. |
| Booking Holdings (BKNG) | Secular travel growth; strong buyback support. |
⚖️ Fair Valued
| Stock | Reason |
|---|---|
| Microsoft (MSFT) | Global dominance, fair multiple, not cheap. |
| Texas Roadhouse (TXRH) | Resilient, but growth expected to slow. |
| Moody’s (MCO) | Close to being a buy, but not quite. |
| Intuit (INTU) | Dominant moat, but priced for perfection. |
| Mastercard (MA) | Still attractive, but not exciting valuation. |
| Netflix (NFLX) | Pullback provides fair valuation, not a screaming buy. |
| FICO (FICO) | Monopolistic moat but needs a better entry point. |
🚫 Overvalued
| Stock | Reason |
|---|---|
| Apple (AAPL) | Slowing growth, priced for perfection, uncertain AI narrative. |
| Costco (COST) | Beloved brand, but extremely high valuation dependency. |
| Palantir (PLTR) | Relies on aggressive growth and high multiple. |
| VICI Properties (VICI) | Good REIT, but limited upside compared to growth opportunities. |
Key Takeaways
- Carlson uses 15% return as his target hurdle rate.
- He prefers companies with consistent earnings and free cash flow growth, wide moats, and reasonable valuations.
- ASML, Booking, Uber, Amazon, Salesforce, S&P Global are his top undervalued stocks.
- He is cautious on Apple, Costco, Palantir, and VICI due to valuation concerns.
Conclusion
Joseph Carlson emphasizes patience in this volatile environment. His strategy is based on valuation discipline and a focus on long-term predictable cash flow growth. Many stocks are entering undervalued territory, but he warns against chasing momentum without strong assumptions to back it up.
“The biggest opportunities come when investors are fearful,” Carlson notes. “These stocks might get cheaper, but the best time to buy high-quality companies is when the world is uncertain.”
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