MAG 7 on sale, are you buying?
Market undiscriminated sell-off offers some discount to Magnificent 7. They have fallen >20% off the all time high, who is your winner? Are there better buys?
Mag7, or Magnificient 7, are Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, and Tesla.
They have a combined market capitalization of $13.5 trillion and are considered the best businesses and safe havens. But that didn’t stop the market from selling them down by an average of 22% from the recent peak.
With the discount, I want to see if anything is attractive compared to our sleep-well picks.
The table below shows that Google (Alphabet) is the cheapest with 25x EV/FCF. Apple, Meta, and Amazon follow with 26-37x FCF.
But I believe Amazon is the dark horse. It doesn’t look cheap on a 36x FCF multiple, but if we look at OCF (operating cash flow), then the current price is the cheapest in the last 10 years, at just 16x. If, in 5 years, it decides to turn off capex, its free cash flow multiple would be the lowest of these Mag7, given it spent the most in CAPEX as well at ~$80B in 2024, vs ~$50B for Google and Meta, and $10B for Apple.
In addition, Amazon's competitive position seems to be more stable. Its advertising engine is better than Meta and Google’s, given its users’ higher purchasing intention, and its ecosystem is more tariff-insulated than Apple’s product-based model.
Which Mag7 is your winner?
Mine is Amazon.
But, I believe the two sleep-well picks - Sea Limited and Mercado Libre, are even better!
You can pay the same P/OCF for Sea Limited and even less at 12x OCF for Mercardo Libre. They do not have an AWS segment attached to them, but they have a rapidly growing and profitable fintech segment (and gaming for Sea Limited) that still takes 5-10 years to mature.
In addition, Sea Limited's e-commerce arm is even more dominant in Southeast Asia, at ~50%, more than Amazon in the US at ~38%, and Mercado Libre in Latin America at ~30%.
But you are worried they might suffer heavily if the tariff war worsens?
Don’t!
Sea Limited and Mercado Libre are the least affected businesses thanks to their regional-focused operations, dynamic and under-penetrated demographics, and profoundly entrenched market positions in the respective regions.
Sea Limited readings - deep dive, buy alert 2, buy alert 1, Q4’24, Q3’24, Q2’24 update
Meli readings - deep dive, Top pick for 2025+, Q4’24, Q3’24 review, Buy alert,
I reviewed these two and all other sleep-well picks in light of the new tariff environment in this report. I didn’t want to let this crisis go to waste. It’s a great time to clean up the house and ensure our portfolio is built for whatever comes at it. Luckily, I found that nine of 11 holdings are safe; one will benefit as it worsens, and one requires trimming.
Grab the report here.
I also offer the first 10 members 15% off the annual plan, and the offer ends on Tuesday, 8th April.
Hurry, grab the big discount Mr. Market is giving you below.
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