Revealed! 3 Undervalued Stocks I Just Bought

Market context / action taken

• Over the previous 2 weeks, the stock market was described as “more volatile than usual.”
• The speaker used that volatility to buy three undervalued stocks last week.

Stocks purchased (and why)

1) Netflix (NFLX)

Why it was discounted

• Netflix’s share price declined after failed acquisition attempts:
  • Attempted to acquire Roku, but Roku was bought by a competitor.
  • Attempted to acquire Warner Brothers, but negotiations ended with Netflix receiving an approx. $4B payment tied to the deal outcome (Warner Brothers exited and sold to Paramount).
• The speaker characterizes management as “prudent,” avoiding overpaying while still “kicking the tires.”

Risk / industry angle

• A concern raised is potential competitive or leverage-related stress at counterparties (e.g., Paramount).
• If counterparties become over-leveraged and performance slows, there could be “fire sale” asset pricing.

Price paid / current price / expectations

• Buy #1: around $80 (after Netflix announced it would not pursue an outbid scenario for Warner).
• Buy #2: around $78 last week.
• Current price: about $72 per share.
• The speaker is down on Netflix but would add more if the price stays below $85.
• Fair value estimate: $125.
• Expected timeline: within 12 to 24 months, the price could approach fair value.

Underappreciated benefits cited

• Netflix described as “best-in-class” in streaming.
• Expected competitive strength as Netflix:
  • grows larger,
  • expands original programming,
  • builds its content library,
  • strengthens its value proposition for incremental subscribers.
• The ad-supported tier is highlighted as providing access for “less than $10 a month.”
• Emphasis on Netflix’s ability to create consumer-loved original content and maintain historically strong profit margins.

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2) Eli Lilly (LLY)

Why it was discounted

• Market leadership in weight loss treatments.
• An innovative pipeline of drugs.

Price paid / fair value

• Purchased around $1,100 per share.
• Fair value estimate: $1,443.

Portfolio rationale / risk diversification

• A key under-appreciated benefit is diversification versus the macro economy.
• Claim: pharmaceuticals (including Eli Lilly specifically) are less correlated with the macro economy:
  • During economic booms, there’s less reliance on marginal consumer discretionary spending.
  • During downturns, health needs still drive demand more consistently than employment-driven spending.
• The speaker previously had little/no health care/pharma exposure, and sees LLY as:
  • an undervalued addition, and
  • a diversification/defensive sleeve.

Buying behavior

• Interest in adding more if the price remains “anywhere near these levels.”

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3) MasterCard (MA)

Why it was discounted

• Valuation pressure tied to perceived risks in Europe, including discussion that European governments may try to reduce reliance on payment networks operated by Visa and MasterCard.
• Macro/political backdrop included:
  • worsening US–Europe relations,
  • references to “Trump” and “liberation day tariffs,”
  • military/spending disputes.

Counterpoint / probability

• The speaker assigns a lower probability that Europe will separate from Visa/MasterCard:
  • European governments move slowly,
  • require broad agreement,
  • political changes take time.
• If separation occurs, the speaker expects it would take longer than initially expected.

Business quality

• Visa and MasterCard described as “very profitable,” among the most profitable globally.
• The speaker already owns both Visa and MasterCard.

Portfolio construction / allocation

• The purchase was used to keep MA and Visa roughly equally weighted.
• Allocation cited:
  • ~8% of the portfolio in MasterCard
  • ~8% in Visa
• The speaker also frames these purchases as diversification away from the “AI trade.”

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“AI trade” exposure and risk reduction

• The speaker says their portfolio had increasing AI exposure and they are adding diversification to reduce risk.
• Mentioned AI-linked holdings:
  • Nvidia (NVDA) (largest position)
  • Alphabet (GOOGL), Amazon (AMZN), Broadcom (AVGO)
• Conclusion: adding NFLX, LLY, and MA diversifies away from AI concentration.

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Methodology / valuation framework (explicitly stated)

• Fair value estimates are mentioned for each company (no detailed model steps provided):
  • Netflix: fair value $125
  • Eli Lilly: fair value $1,443
• Expected convergence timeline (Netflix only):
  • 12–24 months to approach fair value.

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Key numbers / targets / thresholds (consolidated)

• Netflix
  • Bought: around $80 and $78
  • Current price: $72
  • Add-more threshold: below $85
  • Fair value: $125
  • Timeline to fair value: 12–24 months
• Eli Lilly
  • Bought: around $1,100
  • Fair value: $1,443
• MasterCard / Visa
  • Portfolio allocations: ~8% MA and ~8% V

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Disclaimers / disclosures

• No explicit disclaimers were included in the provided subtitle excerpt.

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Presenters / sources

• Presenter/speaker: Not explicitly named in the excerpt.
• Sponsor: The Motley Fool (mentioned; link: fool.com/parkev).